Property investors continue to be disappointed by record low dwelling rental growth, with CoreLogic RP Data reporting the “softest conditions” it’s ever seen for capital city rental markets.
Median weekly rents were flat across the combined capitals for the year to 31 January, according to CoreLogic’s latest figures. Melbourne, Sydney and Canberra were the only capitals to see any year-on-year increases, up 2.1%, 1.8% and 1.4% respectively.
All three capital cities also saw slight monthly and quarterly increases.
It was a very different story in Darwin and Perth, however, which both saw monthly, quarterly and annual falls. Rents in Darwin dropped 13.4% over the year, while Perth was down 8.6%.
Rents were mostly flat or down slightly in Adelaide and Brisbane, while Hobart saw slight monthly and quarterly increases.
The stagnant rental growth means gross yields were down in all capitals compared with 12 months ago. Darwin continues to offer the highest yield (5.3%), but at its current rate of decline Hobart looks on track to take that mantle.
Melbourne still holds the dubious title of lowest-yielding capital with 3%.
Weaker rental conditions prevail
Cameron Kusher, CoreLogic research analyst, pointed out that across every capital city except Canberra, the rate of annual rental growth or decline is lower now than a year ago, indicating the weaker rental market conditions are prevalent across most capitals.
“CoreLogic RP Data has tracked annual rental changes since 1996 and over that time, rental growth conditions have never been weaker,” he said.
“A combination of factors is affecting the national rental market. Among these is a higher level of rental stock resulting in greater options for renters, a slowdown in population growth, higher than normal investment activity and stagnant wage growth.”
Across the combined capitals, rental growth in the year to 31 January was stronger for units (up 1.5%) than houses (down 0.3%). Hobart and Sydney saw the biggest unit rental increases, up 3.6% and 2.9% respectively, while Melbourne and Canberra had the healthiest house rental spikes for the year (up 2.1% and 1.8%).
Nationally, the median weekly house rental price is $487 and $465 for units. Yields for units (4.3%) remain noticeably higher than those for houses (3.4%).