Rental Rates

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Based on the CoreLogic May monthly rental review released today, while rents increased slightly by 0.1 percent in April, overall, capital city rental rates edged lower, falling 0.2percent over the past 12 months.
Rental rates are currently $490/week for houses and $467/week for units across combined capital cities;
Five of the eight capital cities saw a modest rise in rents over the past twelve months, including Sydney (1.4 percent), Melbourne (1.7 percent), Adelaide (0.5 percent), Hobart (1.1 percent) and Canberra (2.5 percent); 
Perth (-8.9 percent) and Darwin (-12.6 percent) experienced large drops in rents &amp; have collectively pulled the combined capital average lower; 
Brisbane rents dropped by -0.6 percent.
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 We anticipate that the weakness in the rental market will persist over the year and rents will continue to fall over the coming months. The annual change in rental rates continues to be at its slowest pace since before 1996.
At the same time last year, rental rates increased by 1.7 percent which indicates a sharp slowdown in rental growth over the past year.
Factors contributing to a slowing in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth - all of which have impacted on demand for rental accommodation.
With dwelling approvals at recent record highs and construction activity set to peak over the next 24 months, accompanied by many new properties still to settle, we anticipate that the weak rental market conditions will persist with rental growth continuing to slow and, or, fall in 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.
Canberra is the only capital city where the annual rental change is currently stronger than it was a year ago. Mr Kusher said this highlights the weakness in rental market conditions is being felt across all other capital city markets.
With rental rates increasing in some cities in April, rates in Sydney, Adelaide and Hobart are at record highs. In all remaining cities, rental rates are now below their highs with the declines recorded respectively in: -0.1 percent in Melbourne, -0.8 percent in Brisbane, -13.7 percent in Perth, -17.3 percent in Darwin and -5.4 percent in Canberra.
The results show that as rental changes outpace home value changes, gross rental yields have trended lower and have hit record lows of 3.3 percent for houses and 4.2 percent for units.
In our two largest capital cities, we’ve seen rental yields move to record lows of 3.1 percent for houses and 4.0 percent for units in Sydney and in Melbourne, rental yields are at a record low 2.9 percent for houses and 4.0 percent for units.
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.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Weekly rents have continued to fall over the past year: Cameron Kusher

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Bunbury sales activity has fallen with 2,600 homes sold over the year to February 2019, down 7% from one year ago, according to the latest CoreLogic Regional Report. 
Of the homes that transacted, 91% were houses while just 9% were units, the report noted. 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/6/5/bunbury%201.jpg" alt="">
<a href="https://www.propertyobserver.com.au/images/2019/6/5/bunbury%202.jpg" target="_blank">Click here </a>to enlarge:
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Source: CoreLogic
Dwelling values have fallen across the Bunbury region over the 12 months to March 2019 for both houses (-4.1%) and units (-19.5%).
Homes are taking longer to sell when compared to February 2018, with the average time it takes to sell a house increasing by 11 days and the average unit increasing by 10 days.
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<a href="https://www.propertyobserver.com.au/images/2019/6/5/bunbury%204.jpg" target="_blank">Click here </a>to enlarge:
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Source: CoreLogic
Vendors are offering a slightly larger discount to secure a sale for both houses and units.
Across the rental market, the advertised rental rate for houses across the region remains unchanged over the year, while units are $10/week more affordable when compared to March 2018.
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Source: CoreLogic
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Bunbury house rent remains unchanged while dwelling values fall: CoreLogic

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Rental rates fell by -0.3% over the final quarter of 2018 which was a slightly more moderate fall than the -0.6% decline over the previous quarter, according to CoreLogic latest quarterly rental report.
The report found that across the combined capital cities, rents fell -0.4% compared to a -0.7% fall the previous quarter and no change over the same quarter in 2017.
The combined regional markets saw rents increase 0.3% over the quarter compared to a -0.1% fall over the previous quarter and a 0.9% quarterly increase a year earlier.
<img src="https://www.urban.com.au/images/2019/1/24/CoreLogic%20Q4%20RR%201.JPG" alt="">
"Sydney (-1.4%) and Darwin (-2.0%) were the only two capital cities in which rents fell over the quarter while rental rates were unchanged in Melbourne," the report said.
"Rates increased over the quarter in Brisbane (+0.3%), Adelaide (+0.6%), Perth (+0.4%), Hobart (+0.9%) and Canberra (+0.6%)."
"The rental change was greater over the December 2018 quarter than the previous quarter in each capital city however, compared to the December 2017 quarter, rental changes were lower in all cities except Brisbane and Perth," the report added.
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Rental rates nationally rose by 0.5% over the 2018 calendar year which was their slowest rate of rental growth any time since 2005.
Annual rental growth has been slowing since it peaked at 3.0% in July and August of 2017. 
Rental growth has been slower over the past year compared to a year ago in all capital cities except for Brisbane, Perth and Canberra.
The report noted: "The rental change in Sydney is at an historic low while Brisbane is seeing its strongest rental growth since August 2013 and Perth is seeing its strongest rental growth since July 2013.
"In Sydney and Melbourne in particular, the weaker rental market conditions look set to continue with a high volume of new housing set to be completed over coming years."
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Rental growth slowest since 2005: CoreLogic

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Rents across the nation were -0.1% lower in December 2018 and were recorded at $433/week, according to CoreLogics latest quarterly rental report.
The report found that, while rents fell -0.2% to $462/week across the combined capital cities over the month, in the combined regional markets rents increased by 0.2% to sit at $373/week.
Rents were lower in Sydney, Darwin and Canberra, they were unchanged in Melbourne and higher in the remaining capital cities.
Click <a href="https://www.propertyobserver.com.au/images/2019/1/24/Dec%20Rental%20yields%20CL.JPG" target="_blank">here</a> to enlarge
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Sydney remains the most expensive capital city rental market with a median rent of $583/week which is $43/week more expensive than Canberra rents ($539/week) which are the second most expensive in the country.
"Historically Hobart has been the most affordable capital city rental market however, strong rises in rents over recent years have pushed rental costs well above those in Adelaide and Perth and now marginally higher than rents in Brisbane."
"The rental market remains mixed with rents falling in Sydney and Darwin and a fairly significant slowdown in growth in Melbourne."
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"Sydney and Melbourne are seeing the impact of such significant 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 years of declines, rents are now rising again. 
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Rents down for landlords in late 2018: CoreLogic

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Perth house rents increased annually for the first time in half a decade, according to the latest research from Domain.
House rents increased 2.9 per cent over the quarter and year to $360 per week, while rental yields increased 1.2 per cent over the quarter and 5.5 per cent over the year to 4.34 per cent. 
Unit rents remained steady over the quarter and year at $300 per week.
Unit rental yields however, improved 2.7 per cent over the quarter and 9.0 per cent over the year to 4.75 per cent.
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Domain research analyst, Dr Nicola Powell said all signs point to a turnaround in Perth’s rental market.
"Demand for rental accommodation will be supported by an improving jobs market and local economy, giving residents greater incentive to stay and new residents reason to relocate west.”
“As 2018 unfolded, Perth began to experience a broad tightening of the rental market. The key drivers were fewer rental listings, slowing construction of new apartments and stable population growth. If this continues, competition between tenants may start to emerge, which has most likely already begun for house rentals. Investors will find Perth a more attractive option as they seek better yields and growth prospects, particularly given falling property prices in the east coast,” she concluded. 
<img src="https://www.urban.com.au/images/2019/1/9/Domain%20Rent%20Prth.JPG" alt="">
 
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Perth house rents increase annually for the first time in 5 years: Domain

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Rental bidding apps such as Rentberry, Liveoffer and Rentwolf, which aim to implement the property auction process to renting, could soon face a crackdown in Victoria.
The announcement was part of the Labor government’s policy push to make “renting fair” through a package of tenancy reforms.
Victoria’s Minister for Consumer Affairs Marlene Kairouz said that as more people are renting than “ever before and for longer – that’s why tenants need a fairer deal”.
“These changes will crack down on rental bidding, make it easier and faster for renters to get their bond back, and will better hold landlords and agents to account for their actions,” Kairouz added.
Academic <a href="https://www.urban.com.au/expert-insights/70258-why-rent-bidding-apps-will-make-the-rental-market-even-more-unaffordable" target="_blank">Garrick Small from CQUniversity Australia</a> had noted recently in The Conversation that in a market already tilted in favour of landlords, renting apps could further push up rents.
Small summarised each of the apps: Live Offer, Rentberry and Rentwolf
"Live Offer asks prospective tenants to fill out forms and these are then ranked for the landlord to choose," Small said.
"The prospective tenants can see where they are in the rankings, in real time.
<img src="https://www.urban.com.au/images/2017/10/18/LiveOffer.png" alt="">
"Rentberry is more of a real-time auction site.
"Prospective tenants submit bids, can see what the current highest bid is and how many bids there have been. 
 <img src="https://www.urban.com.au/images/2017/10/20/Rentberry.png" alt="">
"With Rentwolf, prospective tenants set up extensive profiles, as they would with AirBnB, and then apply for properties through the marketplace."
<img src="https://www.urban.com.au/images/2017/10/20/Rentwolf.png" alt="">
Domain reported earlier this year that the controversial Silicon Valley start-up, Rentberry that lets tenants bid against each other for rental properties will launch in Australia this year.
Elite website editor Sarah Bell recently listed some ‘thinking points’ about rent bidding apps in the Elite Agent.
While she said that the apps encourage a free and open system, rewarding those who compete and are bold, a roof over our heads is a basic necessity and bidding will only increase the stress of renting.
Also, the ‘market price’ for rentals won’t necessarily be dependent on the features of the accommodation as much as it will turn on the availability of the accommodation. 
Bell suggested making available data on recently leased comparable properties so that tenants can make an informed decision about market value, as opposed to market value being whatever a tenant is prepared to pay. 
Rental bidding creates an uneven bargaining power between tenant and landlord, she said.
“There is a danger that as the economy cycles and rental accommodation becomes more scarce, the non-property owning class – some of whom are the most vulnerable people in our society – will feel the impact most sharply.”
The rental bidding apps should try to address the imbalance of power between landlord and tenant. 
The highest possible market price could punish a tenant through the term of a lease and the hassles involved where a tenant cannot afford and ceases to pay rent can dwarf a theoretical windfall from an inflated rent bid.
Limits on bidding based on affordability were needed to protect those most vulnerable to over-bidding, she suggested.
Bidding simply makes price the most important factor in choosing a tenant, rather than other factors such as the tenant’s rental history, stability and others that make a good tenant.
Rental bidding can eventually backfire if tenants feel it is unfair. Collectively, tenants could vote with their feet and simply refuse to rent properties in a rent-bid scenario – essentially driving their corrective action on a perceived power imbalance, she says.
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Debate grows as Victoria announces crackdown on rental bidding  

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Rental rates fell across the combined capital cities over August with the exception of Melbourne, Darwin and Canberra according to CoreLogic's latest Rent Review. 
The combined capital city drop was 0.3 percent month on month
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Cameron Kusher, CoreLogic research analyst said weaker rental market conditions are expected to continue as overall housing supply grows.
"Over the past year rental rates have fallen by -0.5 percent and are now -1.4 percent lower than when they peaked back in May 2015," he said.
"In contrast, we saw capital city rental rates increase by 0.7 percent at this time last year. 
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“As long as wages growth continues to stagnate, coupled with historically high levels of new dwelling construction and slowing population growth, landlords won’t have much scope to increase rents. On the flipside, renters are now in a much better position to negotiate.
"There is the potential for a flight of tenant demand towards higher quality tenancy options in newer buildings. 
“It may be more difficult for owners of older units with fewer amenities to compete with better located and facilitated new unit stock, particularly if there is little pricing differential."
Over the past 12 months, rental rates have increased in Melbourne (+2.9 percent), Hobart (+6.8 percent) and Canberra (+2.6 percent). Rental rates are unchanged over the year in Sydney and have fallen in Brisbane (-1.1 percent), Adelaide (-0.3 percent), Perth (-9.4 percent) and Darwin (-14.1 percent). Melbourne, Hobart and Canberra have each recorded stronger rental growth over the past year compared to the previous year.
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Rental rates across Australia’s combined capital cities drop in August

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Rental rates fell over July by 0.3 percent to be 0.6 percent lower over the 12 months to July 2016 according to the CoreLogic July Rent Index.
According to CoreLogic research analyst Cameron Kusher, rental rates continue to ease as supply ramps up.
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He said potentially, the changing rental market conditions will have a flow on effect for older stock, particularly units given we’re seeing so much new unit supply being added to the rental market, much of which is located in inner city locations.
“It is anticipated that the rental market weakness will persist and that on an annual basis rents will continue to fall over the coming months,” he said.
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"Combined capital city median weekly rents are currently $483 and at their lowest since December 2015. 
"In contrast, this time last year, capital city rental rates had increased by 0.9%. Combined capital city rental rates are $485/week for houses and $467/week for units. 
"Over the past 12 months, rental rates have increased in Sydney (+0.4%), Melbourne (+2.0%), Hobart (+6.2%) and Canberra (+1.9%). Rental rates have fallen over the past year in Brisbane (-1.0%), Adelaide (-0.5%), Perth (-9.2%) and Darwin (-15.7%). Hobart and Canberra are the only capital cities to have recorded stronger rental growth over the past year compared to the previous year.
 
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Rental rates fell 0.3 percent over July: CoreLogic

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Over the coming months, rental rates could begin to fall on an annual basis due to new supply in the market, going by the latest release of the monthly CoreLogic RP Data Rent Review results for February.
“With construction activity set to peak over the next 24 months, and with many new properties still to settle, there is a real possibility that rental rates will fall over the coming months," said research analyst Cameron Kusher.
“Based on our expectations, landlords have little scope to lift rental rates while for renters, it potentially means more surety in securing accommodation and the potential to upgrade into a higher level of accommodation for a similar cost.”
He said the cause of the current slowdown in rental growth was falling wages, excess rental supply in certain areas and lower rates of population growth and population mobility which was hurting demand for rental accommodation.
Here are the February findings:
 Capital city rental rates continue to record no change over the year
 Weekly rents across the combined capital city measure increased 0.3% in February, however, rents were unchanged over the past 12 months 
 Rental rates have increased over the year in Sydney (+1.5%), Melbourne (+2.2%) and Canberra (+1.6%) and are unchanged in Hobart.
 Rents have fallen over the year in Brisbane (-0.7%), Adelaide (-0.4%), Perth (-8.4%) and Darwin (-13.3%).
 Currently, combined capital city rental rates are $488/week for houses and $467/week for units.
 CoreLogic RP Data analysis shows rents across the combined capitals rose by 0.3% in February 2016. Rental rates increased over the month in all capital cities except for Perth and Darwin.
Results Summary:
 Dwelling rental rates across the combined capital cities have not moved and continue to sit at now $485 per week for the past year; at the same time last year rental rates had increased by 1.7% highlighting that the slowdown in rental conditions has been quite sharp over the year.
 Rental rates in Brisbane, Adelaide, Perth and Darwin are currently experiencing some of their largest annual falls on record.
 All capital cities are experiencing annual rental changes which are well below their decade average levels.
 
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