Rental markets appear to be easing, with weekly rents rising 1.1% over the March 2018 quarter compared with a growth rate of 1.5% over the March 2017 quarter.
This slowing trend in rental growth is evident across five of the eight capital cities including Sydney, Melbourne, Adelaide, Darwin and Canberra, according to CoreLogic.
On an annual basis, Sydney is the only capital city where weekly rents are increasing at a slower rate relative to the same period a year ago.
CoreLogic’s Tim Lawless attributes the slowdown in rental conditions to the combination of record levels of new dwelling construction over recent years, higher than average levels of investment which supports the introduction of rental stock, and diminished rental demand as more first home buyers become active in the housing market.
He said with dwelling values slipping lower across most cities, and rents gradually tracking higher in most markets, rental yields have seen some upwards pressure – albeit from a low base in some cities.
Darwin remains the highest yielding capital city.
Despite a 1.6% fall in weekly rents across Darwin over the past twelve months, gross rental yields (5.8%) remain the highest of any capital city due to the fact that dwelling values are falling at faster rate than weekly rents. Hobart is also showing a high gross rental yield profile, averaging 5.0%.
Weekly rents were up 11.7% across Hobart over the past twelve months, which is a slightly lower rate of growth than housing values; as a consequence, Hobart yields remain high but have trended lower over the year.
The lowest gross rental yields remain in Melbourne at 2.93%; only marginally higher than the record low of 2.88% set in November last year. With the 3.9% fall in Sydney dwelling values since July last year, gross rental yields have slowly pushed higher to reach 3.2% at the end of March, up from a recent record low of 3.0% in July 2017.