For the first time in 18 months, rental prices for units have risen 2.5%, which is consistent with growth in rent for houses. A ‘Rent Report’ by Domain, showed that rental yields for houses have now hit record lows of 3.56% across capital cities, with rental yields for units increasing by 1.1% to 3.95%. This has shown investors now shifting more towards the unit market. Australian cities including Sydney, Brisbane, Canberra and Adelaide have seen asking rent prices for units at record high levels. Although, Melbourne is the only city that has seen house rent prices at pre Covid-19 record lows.
Affordability has guided Sydney renters back into apartment living with rents for houses being too costly. Although, this is largely dependent on the tenant, as families will still continue to push for more space that comes with living in a house. These types of tenants who prioritise space and their lifestyle, are willing to pay extra, which is evidenced through rents increasing at faster paces the more bedroom there are in a house. Melbourne’s lack of interstate travel and migration paired with the longest lockdown that has taken place across the world, have caused weakened rental growth, as asking rents for houses are the lowest of all capital cities in Australia.
Considering a continuing reduction in vacancy rates, there is reason to believe that the amount unoccupied rentals will continue to decline which may mean an temporary end to low, relatively affordable rent. Once immigration returns as well as those Australian’s wanting to move back to the city, will cause vacancy rates to continue to decrease in inner cities, which will raise rent prices.
Source: Urban Developer
“THERE’S TAILWIND BEHIND RISING INVESTMENT ACTIVITY BOOSTING RENTAL SUPPLY, TIGHTER LENDING COULD STALL THIS, PARTICULARLY IF WE SEE FURTHER MOVES FROM THE REGULATORS,” – DR NICOLA POWELL, DOMAIN CHIEFECONOMIST