Rents boom in two capitals

Two capital cities reported impressive increases in rents, amid steady median rentals in the rest of the country.

Figures released by REIA show that median rents for houses remained steady in most capital cities in the December quarter 2016.

The only capitals to record movements were Darwin, where rents dropped, and Canberra and Hobart, both recording significant increases.

Canberra recorded the biggest increase. Rents for houses rose by 9.5 per cent in Canberra, while Hobart saw a 6.1 per cent rise.

“The weighted average vacancy rate for the eight capital cities decreased to 2.9 per cent during the December quarter, a decrease of 0.2 percentage points. In most capital cities, the vacancy rates dropped by between 0.1 to 0.2 percentage points,” REIA president Malcolm Gunning said.

Vacancy rates remained steady in Hobart, while Darwin and Canberra experienced increases. The highest vacancy rates were in Darwin and Perth, at 7.8 per cent and 6.4 per cent respectively.

“Over the quarter, both investor finance and owner-occupied housing finance (excluding re-financing) showed strong increases of 8.8 per cent and 11.1 per cent respectively, after small decreases in the previous quarter,” Mr Gunning said.

“The level of investor activity is not unexpected when you consider that ten-year average annual returns for residential investment property range from a low of 6.5 per cent for houses in Perth to 10.5 per cent for two bedroom units in Sydney with most returns being around 8 per cent.

“This tells us why property is favoured above other forms of investment. It is the returns from housing investment that make it a preferred investment strategy, noting that negative gearing is available for all asset classes.”

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