Released today, Domain Group’s Rental Report for the December quarter has revealed the varying effect supply levels and vacancy rates are having on the rental markets of Australia’s capital cities.
“Most capital cities have seen an increase in median weekly rental prices over the December quarter. Melbourne, Adelaide, Hobart and Canberra were the standout performers in terms of housing rental market growth while Sydney saw a steadying of house rents and even a drop in median unit rents,” Domain Group senior economist Andrew Wilson said.
“While unit rents remained steady overall, higher unit vacancy rates are providing more choice for tenants in most capitals,” Dr Wilson said.
In Sydney, the December quarter bought about the first drop in weekly asking rents for since June 2012, with the median rent dropping from $510 to $500 over the three-month period.
Over the quarter there was no change for the median weekly rent for houses in Sydney of $530; however that amount is 1.9% higher than the median rent over the same period in 2014.
“Sydney unit rents fell for the first time in more than three years reflecting significant numbers of new apartments entering the market,” Dr Wilson said.
Sydney house rents, however, remain at record levels – and with the already low vacancy rates still falling there is no relief in sight for tenants,” he said.
For Melbourne the December quarter saw house rents reaching a record high, rising from $390 to $400 over the three months.
That figure represents a 5.3% year-on-year increase for the Melbourne capital.
Weekly unit rents in Melbourne remained flat over the quarter at their record mark of $370, though there is somewhat of a soft outlook for their performance over 2016.
“Melbourne house rents have continued to soar to new record highs with low vacancy rates signalling that tenants can expect more increases to come,” Dr Wilson said.
“Unit vacancy rates, however, are increasing with new apartment stock surging.”
Houses in Adelaide also benefitted over the December quarter, recording a rise in median rents for the first time in 12 months, increasing to $355 from $355, with decreasing vacancy rates likely to result in further rises in the coming year.
Similarly to Melbourne though, the median weekly unit rent remained steady, sitting at $290 where it has been for the past year.
Those results were reversed in Brisbane over the quarter, with unit rents increasing slightly while house rents remain put.
The median weekly rent for unit in the Brisbane capital rose to $375 from $370, while the median rent for a house has now remained unchanged for two years at $400.
“It’s a good news story for Brisbane tenants with house rents remaining steady for two years straight and vacancy rates still rising for both houses and units,” Dr Wilson said.
In Canberra, falling vacancy rates helped the median weekly house rent increase by 4.4% over the quarter from $450 to $470.
It was a similar story for unit rents in the nation’s capital, with the median weekly rent increasing from $380 to $390.
In Hobart, a 3% rise over the quarter pushed the median weekly house rent into record territory at $340, while unit rents remained steady.
Over the past 12 months the median weekly rent for a house in Hobart has risen by an Australian best 6.3%, while the median weekly rent for a unit has risen 3.7%.
Despite those increase, the Tasmanian capital remains the most affordable city for tenants.
The December quarter continued the tough run for Perth and Darwin, with the two cities still experiencing declining rental markets.
In Perth, the median weekly rent for a house dropped 2.4% to $410, while the median weekly unit rent dropped 2.8% to $350.
Over the 12 months to the end of December, the median weekly rent for houses and units in Perth have decreased by 8.9% and 10.3% respectively.
In Darwin, the median weekly rent for a house fell to $570, while median weekly unit rents dipped 4.2% to $460.
Over the year to December, Darwin has seen rents for houses and units drop by 13.6% and 14.8% respectively, a trend that is likely to continue.
“Darwin house and unit rents are falling at the sharpest rate of all the capitals. Unfortunately for investors, the high and rising vacancy rates indicate that more of the same can be expected throughout 2016,” Dr Wilson said.
In terms of rental yields, Hobart is providing the best return for houses at 5.64%, followed by Brisbane at 4.94% and Adelaide at 4.67%.
Hobart also tops the chart for unit yields at 5.58%, followed by Canberra and Adelaide at 5.29%.
