This article is from the Australian Property Journal archive
DESPITE new supply of apartments entering the market, unit rents across most capital cities continued to rise and in Sydney units are almost as expensive as houses, according to the March Domain Rental Report.
The report found the national vacancy rates was steady at 2.1% for houses but fell slightly for units to 2.3%, with overall dwelling vacancies remaining at 2.2%.
But the steady rate disguised the divergence between the capital cities. Brisbane, Adelaide and Hobart house rents rise to new records while Perth and Darwin rents continue to fall.
Domain chief economist Andrew Wilson said in Sydney, the rental relief from the fall in median unit rents in the December quarter was short-lived, with the median unit rents jumping up to $520 per week, closing in on the $530 median weekly rent for houses. Sydney median prices for houses remained unchanged over the March quarter, however, have increased by 1.9% over the year. Unit rents have now increased by 4% over the past year – second to Melbourne for annual growth.
Melbourne unit rents increased to $380, reflecting a 4.1% annual increase – the highest unit rental growth rate of all capitals. House rents consolidated at the record $400, an increase of 2.6% over the year.
“It has been a positive quarter for investors in Melbourne with unit rents now rising to record levels and vacancy rates falling, despite an unprecedented new apartment boom. Melbourne house rents remain at peak values as well, with low vacancy rates indicating no relief in sight for tenants,” Wilson said.
Brisbane house rents increased to a new record of $410 – the first rise recorded since the September quarter 2013. In a double blow for tenants, Brisbane unit rents also increased over the quarter, rising to a new peak of $380.House and unit rents increased by 2.5% and 2.7% respectively, over the past year. Despite recent rent rises, Brisbane vacancy rates remain reasonably balanced with unit rates tightening 0.1% over the March quarter.
Unit rents in Adelaide remained steady at $290 and have now remained unchanged for 18 months. Vacancy rates were also steady over March but remain tight for both units and houses. House rents in Adelaide continued to increase, rising for the second consecutive quarter to a new record median of $360 – up 2.9% over the year.
Perth house rents continue to fall, down 11.1% over the past year and is now $400 per week. Unit rents were steady following seven consecutive quarters of declines. Despite this quarter’s steady result, unit rents have fallen by 9.1% over the past year with both house and unit rents at their lowest since the March quarter in 2012.
Rent in Hobart has continued to rise reflecting the shortage of rental accommodation. House rents rose to a new record of $350– a strong increase of 6.1% over the year and the highest growth rate of all the capitals. Hobart unit rents also increased to a new record of $285 with a yearly rise of 1.8%. Hobart house vacancy rates fell again over March and remain the lowest of all the capitals indicating further rent rises are likely.
Canberra house rents increased to $470 per week and unit rents were up at $395 per week. House rents increased by 4.4% over the past year with unit rents up by 1.3%. Canberra vacancy rates remain very low for both units and houses indicating the potential for further rent increases over the near-term.
Darwin fell again with house rents down to $550 per week and unit rents falling again to $450 per week. Darwin house and unit rents have fallen steeply over the past year down 15.4% and 13.5% respectively – the largest decline of all the capitals. Similar to Perth, Darwin rents are at their lowest since the March quarter 2012.
Meanwhile the gross rental yields were relatively steady. Hobart provides the highest gross returns for houses at 5.6% and rising sharply, with Sydney offering the lowest stable at 3.3%.
Yields for units, however are generally rising reflecting recently increasing rents and weaker price growth. Again, Hobart has the highest rental return at 5.6% with Sydney recording the lowest at 4.1%.
Australian Property Journal
