While rental growth has been moderate over the last 12 months, the property market still represents a lucrative sector for investors, RP Data has claimed.
Across Australia’s capital cities over the past 12 months to April 2013 rental rates have increased by 3.5 per cent for houses and 3.3 per cent for units.
RP Data’s Cameron Kusher said while this is a relatively measured rate of growth, it remains higher than inflation.
Across the combined capital cities, median weekly rents are recorded at $474 per week for houses and $440 per week for units.
“The fact that returns on investment properties are significantly higher than the return on cash is one of the key reasons investors are again looking towards the housing market for investment return,” Mr Kusher said.
“Over the past 12 months rental growth across the combined capital cities has remained quite moderate and has outpaced home value growth.”
Perth and Darwin continue to be the standout performers for rental growth performance where rates have surged ahead over the year. Simultaneously, the not-so-good performers have been Canberra and Hobart where rental growth has dropped.
As at April 2013, house rents were most expensive in Darwin, which boasts a median rental price of $614 per week, followed closely by Sydney, which has a median asking rent of $572 per week.
A retrospective look at rental rates reveals that over the 15 years to April 2013, capital city rental rates increased at an average annual rate of 4.2 per cent for houses and 3.7 per cent for units.
According to Mr Kusher, these figures suggest that rental growth over the past year has been below the longer-term average.
Perth, Canberra, Sydney and Brisbane are the cities which have each recorded the strongest growth in annual rents over the past 15 years, while across the remaining capital cities the annual rate of rental growth has been significantly lower.
The other important feature of an investment property is the rental yield.
Gross rental yields across the combined capital cities are currently recorded at 4.2 per cent for houses and 4.9 per cent for units.
“Today’s data revealed that yields experienced a significant compression between 1997 and 2004. Since that time, there has been little overall change in gross rental yields. However, over the past few years we have seen some slight increases in yields for houses and units. This has occurred due to ongoing increases in rental rates at a time when home values had been declining across all capital cities,” Mr Kusher said.