The national weekly rent increase has taken a dip from 1.0 per cent in the previous quarter to 0.3 of a percentage point over the second quarter of 2019, according to a CoreLogic report.
The most recent CoreLogic quarterly rent review for the June quarter of 2019 identified the 0.3 of a percentage point increase as a “sluggish rate of growth and well down on the seasonally strong first quarter”.
At the end of the 2018–19 financial year, national rents were recorded at $438 per week.
But even though annual change in combined capital city rents was at record-low levels, annual growth in regional rents remains fairly steady over the past quarter.
The report found that rental rates across the combined capital cities sat at $466 per week, substantially higher than the $380 per week across the combined regional markets.
Brisbane and Perth were identified as standout leaders as they were the only two capitals where the annual change in rents over the past year was superior to growth over the same period in 2018.
Rents increased in all capital cities, except for Sydney and Darwin, over the past 12 months.
Gross rental yields also increased over the past quarter across all capital cities, except for Sydney and Canberra, while over the past year, yields firmed across all capital cities.
CoreLogic research analyst Cameron Kusher said that although rental rates in Sydney are falling, the city still remains as the most expensive to rent a property with a median rent of $580 per week.
“For many years, Hobart has been the most affordable rental market; however, the rapid growth in rents over recent years has seen it become more expensive than Brisbane, Adelaide, Perth and Darwin and on par with the cost of renting in Melbourne,” he said.
“Overall, the rental market remains quite mixed; however, it is clear that Sydney accounts for a large share of overall renters with annual falls in Sydney leading to a fall in the combined capital city index.”
Mr Kusher added that Sydney and Melbourne continue to experience the impact of heightened demand from investors over recent years, along with a substantial ramp-up in new housing (largely apartment) supply, much of which was purchased by investors.
“Darwin rents have been falling for many years and they continue to decline. The past year has seen a change of direction for both the Brisbane and Perth rental markets; following a number of years of declines, rents are now climbing again,” he said.
The report also predicted that as interest rates continue to fall and yields across most asset classes soften, rental returns from housing may become more appealing.
“Historically, investors have targeted capital growth. However, going forward, investing for the rental returns on offer during an ultra-low interest rate environment may become increasingly prominent,” Mr Kusher said.
“With rental changes continuing to outpace dwelling value changes, it is likely that rental yields will continue to firm over the coming months and quarters.”