Good communication and helpful with providing us the information we needed to break lease. Thank you Sarah and Ann Sarah Ryan
Brisbane was the only city to record growth in median unit rents in the September quarter, while Sydney and Hobart reported declines in unit rents, Domain’s Quarterly Rental Report has found.
Domain senior research analyst Dr Nicola Powell said that availability of rental stock, investor activity and migration flows have created varied markets across the country.
“Looking just at the September quarter, house rents remained flat in every capital city,” Dr Powell said.
“While annually, growth has slowed relative to the year prior, primarily driven by stalling Sydney and Melbourne markets.”
Although Hobart's performance for units in the last quarter was soft, Dr Powell said it was a standout performer on an annual basis.
“Hobart continued to outperform other Australian capital cities, recording double-digit annual rental growth for houses and strong growth for units.
“Canberra also saw substantial growth, with house and unit rents increasing by 8.4 per cent and 7.1 per cent, respectively.”
She said that this growth has meant Canberra house rentals are now as expensive as Sydney.
“While unit rents in Sydney have started to decline, house rents remained at an all-time high. However, if market conditions continue with increased supply, we could however see some relief for tenants.”
Dr Powell said that rental yields have increased nationally by 0.4 of a percentage point over the past 12 months to 3.76 per cent for houses, and 1.5 per cent for units to 4.29 per cent.
“For investors, Hobart continued to provide the best gross rental yield for houses at 4.94 per cent, and Darwin and Canberra provided the highest gross rental yields for units at 6.08 per cent and 5.95 per cent, respectively.
“Sydney and Melbourne continued to record the lowest gross rental yields for houses and units, although have begun to improve given the softer sales market.”
Capital city markets
Median weekly house rents remained steady at $550 per week. House rents have now flatlined for a year and a half. Unit rents declined by 0.9 of a percentage point, the first time since records began in 2004.
Dr Powell said that although gross rental yields in Sydney remain low relative to the other capitals, declining property prices have seen house and unit yields experience the strongest annual improvement since 2012.
“Sydney unit rents have now declined from an all-time high in response to an increase in rental supply. Advertised rental stock is currently at a new record high, with the growth in unit rentals hitting a pace not seen in six years. Tenants will find they have considerably more houses and units to choose from than this time last year.
“If advertised stock levels continue to track higher at the rapid rate seen this year, it should put downward pressure on rents. Although strong levels of migration, combined with the barrier of high house prices, may help to counterbalance this scenario.”
Median weekly rents remained flat at $430 for houses and $410 for units. Melbourne house rents climbed by 2.4 per cent and unit rents by 2.5 per cent. However, rental price growth is less than half of the annual growth over the same period in 2017.
House gross rental yields improved to 3.13 per cent, which has remained the lowest across all of the Australian capital cities however. Melbourne unit gross rental yields jumped by 0.8 of a percentage point to 4.32 per cent — the highest quarterly growth of all Australian capital cities.
“Rental prices continued to rise on an annual basis, but the pace of growth is less than half of what it was over the same period in 2017,” Dr Powell said.
“Despite record levels of apartment development and investment activity, total advertised stock volumes have failed to increase. The number of advertised unit rentals has dwindled for four consecutive years and house rentals are also tracking lower over the year.
“The unprecedented influx of new residents from overseas and interstate has placed additional demand on the rental market, which has led to heightened competition for rental accommodation.”
She said that the impact of the Victorian government’s recent rental reform is yet to be seen.
“It could have an adverse effect on Melbourne’s rental landscape, with landlords opting for shorter-term leases or selling up. However, the overall impact on the rental market is likely to be minor.”
Median weekly house rents remained stable at $400 per week. Unit rents increased marginally by 1.4 per cent to reach $375 per week.
For investors, Brisbane provided the third strongest gross rental yields for houses and fourth for units compared to all other Australian capital cities. House gross rental yields improved by 0.6 of a percentage point to 4.62 per cent despite an annual decline of 0.6 of a percentage point. Unit gross rental yields increased by 0.7 of a percentage point to 5.12 per cent — the strongest annual increase in more than six years.
Dr Powell said that this was the longest period of stability in Brisbane’s rental history.
“Apart from a couple of fluctuations, tenants in the Sunshine State have enjoyed four years of steady house rents at $400 a week. The unit market appears to have had a minor turnaround, with rents increasing for the first time in two years.
“Brisbane’s advertised rental stock slipped as a result of the unprecedented inner-city unit development slowing. The state experienced a decade high level of internal migration, with Brisbane becoming one of Australia’s fastest-growing city populations. All signs point to a broad tightening of the rental market.”
Despite house rents increasing by 4.2 per cent over the year, Adelaide remained the second most affordable city for tenants, behind Perth. Rental prices held steady at $375 per week.
Gross rental yields for houses declined to 4.47 per cent. For units, gross rental yields strengthened by 0.1 of a percentage point.
Dr Powell said that Adelaide’s rental market appears to be tightening, with advertised stock levels declining.
“If rental supply continues to track lower in the coming months, it will create greater competition between tenants, which will drive up asking rents.”
Canberra’s median weekly house rent held steady at the record high of $550, which was first reached in the June quarter.
Canberra remains the most expensive city to rent a house, along with Sydney. House rents increased by 8.4 per cent over the year, the second highest jump of all capital cities.
Unit rents in Canberra were flat at $450 per week, a record that has been maintained for the entire calendar year. With an annual increase of 7.1 per cent, Canberra achieved the second highest growth in unit rents of all capital cities year-on-year.
“Rental prices may not have risen further over the quarter, but Canberra has experienced one of the strongest annual growth rates of all the capital cities,” Dr Powell said.
“Supply continues to tighten, with house rental numbers now at a five-year low and unit rental supply hitting a two-year low.”
Perth retains its title as the most affordable capital city rental market, with no changes to house and unit rents.
Perth’s median house rent is stable at $350 while units are also flat at $300 per week. This is Perth’s sixth consecutive quarter of flat unit price movement.
Gross rental yields for houses continued to improve at 4.26 per cent. Gross rental yields for units declined to 4.58 per cent but continued to improve year-on-year.
“Perth tenants will find themselves with less rental choice as advertised rental listings have been dwindling for over a year,” Dr Powell said.
“A broader tightening of the rental market appears to be occurring due to a slowdown in dwelling commencements and investor activity remaining relatively stagnant. This has seen tenants absorb the existing rental stock.”
Hobart experienced the highest annual growth in weekly house rents with a 10.8 per cent increase to $410 per week. Hobart was the only capital city to record double-digit rental growth.
Unit rents declined by 2.8 per cent to $350 per week but remained strong with an annual jump of 9.4 per cent.
Dr Powell said that the significant momentum that built in Hobart’s competitive rental market over the past two years appears to be easing.
Darwin house rents held steady over the quarter but declined over the year by 3.8 per cent to $500 a week.
Unit rents in Darwin experienced no change, holding steady at $400 per week. This is the first time in four years that unit rents have not declined over the quarter and year.
Darwin continued to offer investors the highest unit gross rental yields at 6.08 per cent, the only Australian capital city to achieve a yield above 6 per cent.
“For investors, a softening sales market continues to improve unit gross rental yields, almost pushing them back to the record highs achieved in 2004 and 2005,” Dr Powell said.
She added that a turnaround in rental demand is largely dependent on economic and population growth and jobs creation.
“The Northern Territory government has announced a revitalisation of Darwin’s CBD with an aim at enhancing liveability and offering key workers financial incentives to relocate.
“The impacts from the initiatives remain to be seen, but the long-term approach to addressing population growth is likely to support rental demand.”