A senior economist has pointed to recent rental data showing rental yields in the Sydney market have stabilised.
Domain Group senior economist Dr Andrew Wilson said the “really interesting” aspect of the current Sydney market is rental yields are holding strong.
“Although yields have fallen because of that very strong price growth and the flattening of house rents, we are seeing rental yields holding,” he told Residential Property Manager.
“Now they are low-ish compared to other capital cities, but investors look for capital growth as target number one, and Sydney is still providing that capital growth, particularly in those investor markets.
“They key thing here is yields are holding; we are not seeing yields continuing to fall.”
Mr Wilson said at the present time the market is absorbing record investor numbers and still providing “good news”.
“Now how long it will last, we don’t know, but part of the equation is that we are getting record levels of new migrants into NSW from overseas, and that is part of what’s continuing to drive that demand, particularly for rental properties,” he said.
Dr Wilson said with the high level of investors in the market, the question was whether there would be enough tenants to go around.
“Well so far so good. In fact, our latest rental data shows that Sydney rents are rising,” he said.
“We have seen a rise in unit rents and a rise in house rents over the June quarter.
“We have seen unit rents just about where house rents are at the moment, $500 a week is the median asking rent for a unit in Sydney and $510 for a house, so converging together,” he added.