Brisbane and Perth had standout rental growth this year: Cameron Kusher

EXPERT OBSERVER

The CoreLogic quarterly rent review released today shows national weekly rents increased by 0.3% over the second quarter of 2019; slower than the 1.0% increase the previous quarter and level with rental growth over the June 2018 quarter.

Capital city rents were 0.1% higher over the quarter and -0.1% lower year-on-year. Regional market also saw an increase and were 0.7% higher over the quarter to be 1.9% higher over the past 12 months.

The annual change in combined capital city rents remains at record low levels (based on data which is available back to 2005) while annual growth in regional rents has remained fairly steady over the past quarter.

The report found:

• Rents increased in all capital cities except for Sydney and Darwin over the past 12months

• Brisbane and Perth were the only two capitals where the annual change in rents over the past year was superior to growth over the same period in 2018

• Gross rental yields are currently recorded at 4.14% nationally compared to 4.10% at the end of the previous quarter and 3.83% a year ago.

• Gross rental yields increased over the past quarter across all capital cities except for Sydney and Canberra while over the past year, yields have firmed across all capital cities.

• Nationally, rents were unchanged on a monthly basis in June 2019.

• Over the second quarter of 2019, national rents have increased by just 0.3%; a sluggish rate of growth and well down on the seasonally strong first quarter in which rents rose by 1.0%.

• At the end of the 2018-19 financial year, national rents were recorded at $438/week.

• Rental rates across the combined capital cities sat at $466/week and substantially higher than the $380/week across the combined regional markets

• Looking at the change in rents over the month across the capital cities, rents were lower in Sydney, Darwin and Canberra; they were unchanged in Perth and higher elsewhere.

Although rental rates in Sydney are falling, the city still remains as the most expensive city to rent a property with a median rent of $580/week. For many years Hobart has been the most affordable rental market however, the rapid growth in rents over recent years has seen it become more expensive than Brisbane, Adelaide, Perth and Darwin and on par with the cost of renting in Melbourne.

Overall, the rental market remains quite mixed, however, it is clear that Sydney accounts for a large share of overall renters with annual falls in Sydney leading to a fall in the combined capital city index.

Sydney and Melbourne continues to experience the impact of heightened demand from investors over recent years along with a substantial ramp-up in new housing (largely apartment) supply, much of which was purchased by investors.

Darwin rents have been falling for many years and they continue to decline. The past year has seen a change of direction for both the Brisbane and Perth rental markets, following a number of years of declines rents are now climbing again.

CAMERON KUSHER is the head of research for the Australian branch of CoreLogic

Kusher regularly posts on the CoreLogic website.