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top 10 agents

Alexander Phillips

Top 1

Year of Experience: 21

Support Staff: 3

Residential Property Listings Secured: 241

Total Value of Residential Properties Sold: $ 706,737,500

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top suburbs

12 month growth
Manyana
70.61%
Tamarama
70.55%
Box Hill
64.95%
Goodwood
64.38%
Bawley Point
63.64%
Lennox Head
62.11%
Casuarina
62.08%
Queenstown
61.31%
Warana
60%
Cooroibah
59.43%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
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rpm logo latest

Rent rises hit wall

By Staff Reporter
10 November 2014 | 1 minute read

Capital city rents are growing at their slowest rate in more than a decade, with a surge in new property stock and rising home values the most likely contributors to the slowdown, according to new data.

RP Data’s monthly combined capital city rental market analysis showed rents across Australia’s big cities grew by just 1.8 per cent in the past year, compared to a five-year average growth rate of 3.8 per cent.

Research analyst Cameron Kusher said the rate of rental growth is easing on the back of a large rise in capital city home values and a strong rise in the supply of new homes being built.

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Mr Kusher said added to this is the impact of record-level investor buying, which ultimately affects overall rental market supply.

“Slow rental growth rates have a knock-on effect for rental yields,” he said.

While slowing rent rises might be a boon for tenants, property investors are seeing returns drop.

Rental yields are at their lowest in nearly five years, as rapidly rising property prices outpace sluggish rent growth.

According to the RP Data figures, Melbourne’s average rental yield was now 3.3 per cent, the lowest recorded in a capital city.

Sydney recorded average yields of 3.7 per cent, the lowest since 2005.

Mr Kusher said that with the rate of capital gains outpacing rental growth, we are seeing rental returns reduce across all capital cities.

“In fact, over the past year gross rental yields have fallen across each capital city,” he said.

RP Data said the “surge” in building approvals over the past 18 months is a likely contributor to slower rental growth rates.

Mr Kusher said with the number of home sales rising as a result of new supply, more investor-owned properties and population growth slowing, renters now have more choice when it comes to housing options.

As a result, the owners of investment properties have less scope to increase weekly rents given the large supply of alternative accommodation options, he added.

“With such tepid growth in rents and such a high level of investment activity, it is clear that most investors are buying residential property with a view to capital growth rather than rental returns,” he said.

Rent rises hit wall
Declining
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Listen to other installment of the Real Estate Business Podcast
top 10 agents

Alexander Phillips

Top 1

Year of Experience: 21

Support Staff: 3

Residential Property Listings Secured: 241

Total Value of Residential Properties Sold: $ 706,737,500

VIEW COMPLETE REPORT
1/10
Do you have an industry update?

top suburbs

12 month growth
Manyana
70.61%
Tamarama
70.55%
Box Hill
64.95%
Goodwood
64.38%
Bawley Point
63.64%
Lennox Head
62.11%
Casuarina
62.08%
Queenstown
61.31%
Warana
60%
Cooroibah
59.43%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.