Growth in Australia’s residential rental market slowing in first quarter of 2018
Residential rents in Australia increased by 0.3% in March and also increased by 1.1% quarter on quarter and are now 2.2% higher than a year ago, the latest national rental review shows.
However, compared to the first three months of 2017 when rents increased by 1.5%, growth in the market has slowed by 0.4%, the data from real estate firm CoreLogic also shows.
A breakdown of the figures shows that rental growth over the first quarter is higher in the regional markets at 1.2% than in capital cities where they increased by 1%. This trend is also reflected in annual activity with rents up 3.1% in the regions compared to an increase of 1.9% across the capitals.
Over the first quarter of 2018 rents climbed in all capital cities except for Darwin where they fell by 0.3%. The highest quarterly rental increases were in Hobart with growth of 5% and growth of 2.3% in Canberra.
On an annual basis Hobart also leads the growth with rents up 11.7% over the last 12 months. Overall rents increased year on year in all capital cities except Perth with a fall of 1.3% and Darwin down 1.6%.
The national median rent for March 2018 was $427 per week, some $426 for houses and $430 for apartment. Across the capital cities, the median rent reached $459 per week with $460 for houses and $453 for apartments. Across the regional markets, both houses and apartments averaged $355 per week.
The data also shows that Adelaide has the cheapest weekly rent out of all the capital cities at $374 and he highest median weekly rent is in Sydney at $582. However rents in Sydney rose 0.5% in the first quarter of 2018, the weakest first quarter for rental growth in Sydney since 2009.
Sydney’s Northern Beaches is the most expensive region to rent in New South Wales with a median rent of $877 per week, up 1.9% quarter on quarter, followed by the Eastern Suburbs at $848 per week, up 1.8%. While the most affordable rents are in Murray at $282 and Far West and Orana at $283.
According to CoreLogic researcher Cameron Kusher, the rental market has softened in most capital cities and although values are still rising, they are doing so at a slower rate than they have over recent first quarters of the year.
‘From an investor’s perspective, large new housing supply additions and slowing rental growth means that they will need to find ways to differentiate their properties from others. Whether that is on rental cost or by renovation, we would expect that competition for tenants in most capital cities will increase,’ he said.
‘Rental yields are climbing slightly from historic low levels however, they remain lower than they were a year ago. Investors remain most active in New South Wales and Victoria and have been targeting capital growth rather than rental return. With values now falling, active investors should be more focused on those regions with stronger prospects for value growth and higher rental returns,’ he added.