Renting getting cheaper across Australia’s capitals
Rents are edging down lower across Australia’s capital cities, with two cities seeing significant declines.
New figures from CoreLogic RP Data show capital city rents declined in April 0.2% year-on-year. The annual change is the lowest since CoreLogic RP Data began tracking rents in 1996.
Contributing to the downward trend were large falls in Perth and Darwin. Perth rents were down 8.9% year-on-year, while rents in Darwin fell 12.6%.
“Factors contributing to the slowdown in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth which have impacted on demand for rental accommodation,” CoreLogic RP Data research analyst Cameron Kusher said.
The median rent across capital cities is $486. Sydney renters still face the highest prices in the nation, with the median price at $602. Rents are at a record high in Sydney, as well as in Adelaide and Hobart. The remaining capital cities have all seen rental prices edge off their previous peaks.
Kusher said high dwelling approvals, which are expected to see construction activity peak over the coming 24 months, will keep a lid on rental growth across most capital cities.
“Based on current market conditions, landlords won’t be in a position to lift rental rates and may actually need to reduce rents in order to keep their tenants. We see renters as holding a stronger negotiation position and where they now have the potential to upgrade into higher grades of accommodation for a similar, or lower rents,” he said.
Gross rental yields have fallen 0.3% for both houses and units since April 2015. With rental yields falling, CoreLogic RP Data said investors would have to count on capital growth rather than rental returns. The company said yields were lowest in Melbourne and Sydney, and investors were likely to be utilising negative gearing to offset cash flow losses.
Kusher predicted the trend of falling rental yields was likely to continue.
“With home values continuing to grow and rental markets expected to soften further, don’t be surprised if we see a further compression of gross rental yields over the coming months,” he said.