Ensure you never miss an issue of the
real estate business bulletin
Rental returns ‘unhealthy’ in capital cities

Rental returns ‘unhealthy’ in capital cities

by Andrew Jennings 1 comments

Australia's property market is not currently seeing the level of rental appreciation you'd expect to see with vacancy rates currently at such low levels, according RP Data's head of research.

Tim Lawless told Residential Property Manager that with rents only just keeping pace with inflation, the market shouldn't really expect yields to show any sort of upward momentum until the housing market slows down.

 “When you look at the growth in rent last year, it was only about 2.5 per cent across the capital cities,” said Mr Lawless.

“At the same time, [property] values have risen by more than 10 per cent, so clearly we’re seeing dwelling values outpacing rental growth quite substantially,” he added.  

Mr Lawless believes the by-product of this is rental yields "now being compressed", particularly in the cities that have experienced strong growth, such as Sydney and Melbourne.

“Rental yields are looking pretty unhealthy in those cities where rental growth has been outpaced by values,” he said.

On a more positive note, Mr Lawless said Brisbane rental returns are looking a little rosier.

“In Brisbane, we are still seeing rents being outpaced by value growth but by nowhere near the same margins. Yields are still looking pretty healthy in Brisbane, compared to Sydney and Melbourne

“Broadly speaking, we’re not really seeing the level of rental appreciation you’d expect to see when vacancy rates are so low,” he added.  

Rental returns ‘unhealthy’ in capital cities
lawyersweekly logo
promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2017

The REB Top 100 Agents ranking is the foremost ranking of agents in Australia. It has set the bar for excellence in Australian real estate. To be ranked as an REB Top 100 Agent is the standard real estate professionals strive for. See the full 2018 ranking here!

featured podcast

featured podcast
The difference between an average agent and one who dominates

McGrath Crows Nest’s Peter Chauncy is number 10 in this year’s REB Top 100 Agents ranking. Peter, however, is more likely not surprised ...

View all podcasts

Would you consider working for Purplebricks or a similar 'DIY' model?

Yes (7.2%)
No (80.9%)
Perhaps - make me an offer (12%)

Total votes: 209
The voting for this poll has ended on: July 13, 2018
Do you have an industry update?