As annual rental rates continued to plummet across Australia, and are now -0.6% lower over the past year, weekly rents across the combined capital cities also fell by -0.4% in June 2016 according to the CoreLogic June Rent Review.
Currently, combined capital city rental rates are $487/week for houses and $469/week for units. However, while a majority of capitals saw a drop in rental rates over the month, on an annual basis, half of Australia’s capital cities actually recorded a rise in rents. These included Sydney (0.4%), Melbourne (1.7%), Hobart (4.6%) and Canberra (1.9%).
According to CoreLogic research analyst Cameron Kusher, the large rental falls in Perth (-8.6%) and Darwin (-16.2%) have pulled the combined capital average lower, with rents in Brisbane (-0.3%) and Adelaide (-0.4%) also lower over the year.
Mr Kusher said, “It is anticipated that the weakness in the rental market will persist and where on an annual basis, we will see rents fall even further over coming months.” At a combined capital city level, gross rental yields were recorded at 3.2% for houses in June 2016 and at 4.1% for units, each of which are sitting at record low levels.
Mr Kusher said, “A year ago, gross rental yields were recorded at 3.5% for houses and 4.4% for units across the combined capitals, indicating a fairly sharp compression of yields over the year.” “It’s also likely that we’ll see yields compress further over the coming months. However, this will be dependent on growth in home values as well as the direction of rental rates.
“As a result, capital growth, which has slowed from its peak, will continue to be a much more important factor for property investors than rental returns, “he said.
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