Residential Rental Rates in Australian Cities Growing Slowly



According to an article in Propertywire, residential rental rates in Australian cities are not only just growing slowly, but at the slowest pace on record. This is according to the latest data from CoreLogic.

While the cities of Hobart and Sydney have seen the strongest rental growth over the past 12 months, rents in Canberra, Darwin and Perth have dropped by 0.6%, 5.5% and 4.5% respectively. In May the overall combined capital city rental rates increase by a measly 0.1%. On a quarterly basis, combined capital city rental rates have increased by 0.6%, while on a yearly basis they have increased by 1.5% compared to annual increases of 2.2% a year earlier. The report from CoreLogic also shows that home values are increasing faster than rents, causing gross rental yields to edge downwards.

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In Sydney, the city is seeing strong population growth, creating increased demand for accommodation and while Sydney and Melbourne both recorded low rental yields, experts point out that it’s clear investors are not focusing on rental returns. Instead it seems as if they are looking towards capital growth, a situation that’s likely to remain for at least the short-term future. Investors looking to gain a more balanced approach to property investment are being recommended by experts to look towards the markets in Adelaide or Brisbane, but the value growth in these cities will not match that of Melbourne or Sydney in the near future.

Apparently the annual rate of rental growth is now the slowest on record, a fact that is being attributed to a property construction boom in Australia’s capital cities which in turn is being accompanied by investors participating heavily in the housing market.

Slow growth in residential rental rates isn’t the only thing attracting attention in Australia as two housing economists have claimed the country could be on for a housing market collapse similar to that seen in the US and Ireland. An article in news.com.au outlines the concerns of these economists who are forecasting a collapse due to an oversupply of housing in the country, particularly in Victoria. It’s being predicted that this will begin in Melbourne as rental rates haven’t increased substantially over the past five years. Property prices have increased by 178%.

The economists raising alarm over this latest possible bubble can’t pinpoint the exact reason why the real estate market could collapse but are certain it will happen. They point out that property prices in all capital cities are grossly inflated compared to rents, inflation, income and GDP.

Allison Halliday About Allison Halliday

Allison Halliday is a Realty Biz News contributing writer. She handles International Real Estate and is a seasoned blogger.

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