Capital city rent prices on the up

Rental rates have increased by 3.5 per cent for houses and 3.3 per cent for units across Australia’s capital cities over the 12 months to April 2013, according to recent figures from RP Data.

Across the combined capital cities, median weekly rents were recorded at $474/week for houses and $440/week for units.

RP Data’s senior research analyst, Cameron Kusher, said, “The fact that returns on investment properties [were] significantly higher than the return on cash is one of the key reasons why investors are again looking towards the housing market for investment return.”

Perth and Darwin continued to be the standout performers for rental growth performance over the period, while Canberra and Hobart saw rental growth decline. As of April 2013, house rents were most expensive in Darwin ($614/week) followed by: Sydney ($572/week), Canberra ($539/week) and Perth ($508/week). For units, rents were highest in Sydney at $498/week followed by: Darwin ($486/week), Canberra ($448/week) and Perth ($446/week).

A retrospective look at rental rates reveals that over the 15 years to April 2013, capital city rental rates increased at an average annual rate of 4.2 per cent for houses and 3.7 per cent for units. 

According to Mr Kusher, these figures suggest that rental growth in the year to April 2013 was below the longer-term average. Perth, Canberra, Sydney and Brisbane were the cities that recorded the strongest growth in annual rents over the 15 years to April 2013, while across the remaining capital cities; the annual rate of rental growth was significantly lower.

“Today’s data reveals that yields experienced a significant compression between 1997 and 2004. Since that time, there has been little overall change in gross rental yields. However, over the past few years we have some slight increases in yields for houses and units. This has occurred due to ongoing increases in rental rates at a time when home values had been declining across all capital cities,” Mr Kusher explained.

Mr Kusher concluded that “given the current economic environment and cost of housing, it [is] unlikely that gross rental yields will return to their previous levels, however, rental growth has historically been fairly moderate and if it reverts to this level throughout this period of low value growth we may see further improvement in gross rental yields over the next year.” 

For more information about the residential property market in your area(s) of interest, please feel free to stop by your local CENTURY 21 Real Estate office for expert and clear advice.

Posted by Charles Tarbey on 30/05/2013 at 12:00 AM | Categories:

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