Rental rates showing little signs of increasing
A key indicator for reporting property market conditions across Australia’s capital cities is rents. The CoreLogic RP Data rental review distributed each month and released today covering October rental market activity provides a deep-dive analysis into the impact rental rates may or may not be having on capital city property markets.
The October analysis shows rents across the combined capitals were virtually unchanged in October, down by -0.1% over the month, with rents lower in four of the eight capital cities. The annual rate of change has increased slightly from 0.5% in September to 0.6% in October.
CoreLogic research analyst Cameron Kusher said, “The data points to an ongoing softening of rental growth, particularly throughout this year. With just two months remaining to year’s end, it seems that rental growth will be very soft over 2015.”
“The construction boom across the capital cities, coupled with slowing population growth, low mortgage rates and the recent heightened level of activity from investors are the major contributing factors to the slowing rental growth.
“Sydney, Melbourne and Brisbane continued to record rental rises over the past year however, each city is seeing a slowing in the pace of rental growth relative to 12 months ago. Clearly, the increase in investment stock is providing landlords with little scope to lift rental rates while the low mortgage rate environment provides little incentive to push yields higher,” Mr Kusher said.
Dwelling rental rates across the combined capital cities are recorded at $483 per week and they have increased by just 0.2% over the first ten months of the year while they have risen by 0.6% over the past 12 months.
Weekly rents across the combined capital city measure fell by -0.1% in October however, on an annual basis they recorded a slight rise taking annual rental growth to 0.6%.
Only Sydney and Melbourne have recorded rental increases greater than 2% over the year.
Rents have fallen over the year in Perth and Darwin, while the remaining capitals have seen rents rise by less than 2% over the year.
Currently combined capital city rental rates are $487/week for houses and $463/week for units.
It is anticipated that the rate of rental growth will continue to slow over the coming months due to increased supply of housing and rental stock and slower migration rates.
Looking across the individual capital cities, over the past year, Sydney and Melbourne have recorded the greatest increases in weekly rents. Over the past month, weekly rents have moved lower across every capital city except Sydney, Hobart and Canberra where they rose and in Melbourne where they were unchanged. Over the past three months rents are lower in all capital cities except for Sydney and Melbourne.
Rental Index results as at October 31, 2015
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