This article is from the Australian Property Journal archive
RENTERS can breathe a sigh of relief because rental growth has remained largely flat in the June quarter despite vacancies falling, according to the Australian Property Monitors.
APM’s Rental Price Series Quarterly Report found nationally median rents for houses rose by just under 1%, bringing annual growth to a relatively weak 3.1%. Units had a relatively strong quarter with growth of 3.5%, making up for a slow 2009 and bringing annual growth for units to just over 4%.
APM economist Matthew Bell said although vacancy rates remain low in most capital cities and unemployment continues to fall, the quarterly figures indicate that landlords accepted renters may not have been as willing to agree to rental increases.
“Higher mortgage costs have hit some landlords hard, but weak consumer spending and concerns over the global economy, reflected in the fall in the local share market, has meant that landlords have been conservative in raising rents compared to the March quarter,” he added.
Sydney was the only major capital city to record rental growth for both houses and units, resulting in a weekly median rent of $480 for houses and $440 for units. This was followed by Canberra, house rents were up 2.3% to $450 pw and unit rents rose 1.9% to $413 pw.
In other cities, houses rents were fell or stable, with units recording only moderate rental growth in the quarter.
Of the major capitals, higher vacancy rates in Brisbane and Perth resulted in lower annual rental growth compared to Sydney and Melbourne, where vacancy rates remain relatively low.
Brisbane house rents fell 1.4% to $360 pw and are 2.9% higher than a year ago and Perth prices were flat at $370 pw. Melbourne house rents also fell 1.4% to $365 pw and unit rents rose 2.9% to $350 pw.
Adelaide rents declined -1.5% to $360 pw and unit rents rose 1.9% to $265 pw. Darwin was the worst performing city, house rents tumbled 5.5% to $520 pw and unit rents fell 6.3% to $450 pw.
The report also found gross rental yields fell in all capitals in the 12-months to June as property price growth outstripped rental growth for the majority of the period.
In the June quarter, rental yields increased in most capitals, with the largest increases coming Melbourne and Darwin, where price growth has slowed most noticeably.
Bell said with the outlook for price growth softening for the remainder of 2010 and with rents expected to return to growth, yields are expected to start rising slightly for the remainder 2010.
“The exodus from the rental market to the ownership market that occurred in 2009 is still having an effect on asking rents in most capitals. However, the alternative option for renters of moving into ownership has become less attractive as property prices have risen significantly in most cities in the last year and interest rates have risen a long way off their lows, with increases on the way.
“As leases expire and are renewed however, it is expected that a robust employment market, rising incomes and low vacancy rates in most capitals will start seeing asking rents increasing again, as we’re already seeing in Sydney, the country’s largest rental market,” he concluded.
Australian Property Journal
