Yields stagnant despite growth

Yields stagnant despite growth

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Australia has seen virtually no change to yields despite moderate dwelling value growth and a 3.5 per cent increase in rents over the past year, figures from RP Data show.

RP Data senior researcher Cameron Kusher also confirmed that buying activity levels appear to be on the increase based on data recently released by the ABS, suggesting that investors have been flocking back to the market.

“These headline figures of 2.7 per cent annual growth in home values, and current gross rental yields of 4.3 per cent would suggest there is little reason for such activity,” Mr Kusher said.

“However, when you consider that the official cash rate was just three per cent in April, it appears that investors have been chasing yields and positioning for long-term capital growth over term deposits in the bank.”

Over the 12 months to April 2013, capital city rental rates increased by 3.5 per cent for houses and 3.3 per cent for units. Across all capital cities, the weekly median rent for a house is $474 per week and $440 per week for a unit.  

A comparison of capital city rental rates to capital city value growth shows that over the period from April 1997 to April 2013, overall growth in home values was significantly greater than the growth in rents.

Mr Kusher said that while higher than inflation, we are seeing relatively measured growth in the rental market.

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