Rents in most cities remain at record highs despite a flood of investors pumping extra properties onto the market.
Sydney unsurprisingly takes the crown for most expensive rents, with median house rents sitting at $520 a week and unit rents not far behind at $500 a week, according to the Domain Group Rental Report.
But it was Hobart that saw the strongest rise in rents over the past year, jumping 6.5 per cent for house rents and a whopping 12 per cent fur units, though it is still the cheapest capital city to rent in.
Darwin saw sharp falls of 7.1 per cent over the year, while Perth wasn’t far behind – good news for renters, but not so much for investors.
Despite low interest rates fuelling a flood of property investor activity over the past two years, rental vacancy rates remain low at 2.2 per cent nationwide, suggesting rents will only rise further, Domain senior economist Andrew Wilson said.
“Sydney is still one of the most expensive capital cities for tenants with record investor activity failing to impact housing shortages,” Dr Wilson said.
“The falls we’ve seen in Darwin and Perth demonstrate a softening of demand and increased supply in those local markets.
“With the exception of Perth and Darwin, upward pressure on rents is set to continue through 2015 in most capitals.” Rental yields for investors – the rate of income compared to a property’s value – have continued to deteriorate over the year.
Sydney took the biggest hit with gross rental yields on houses down 8.2 per cent over the year, and down 5.1 per cent for units.
But that won’t dampen record levels of investor activity, given property is still providing better returns than term deposit rates, Dr Wilson said.
“The prospect of lower interest rates, relatively high comparative yields and capital growth will continue to fuel investor activity, particularly in Sydney where rents remain at record levels,” he said.
MEDIAN WEEKLY RENTS FOR HOUSES
Sydney – $520, up 4 pct in year to March
Melbourne – $390, up 2.6 pct
Brisbane – $400, flat
Adelaide – $350, flat
Perth – $450, down 5.3 pct
Canberra – $450, flat
Darwin – $650, down 7.1 pct Hobart – $330, up 6.5 pct
MEDIAN WEEKLY RENTS FOR UNITS
Sydney – $500, up 2 pct
Melbourne – $365, flat
Brisbane – $370, flat
Adelaide – $290, up 1.8 pct
Perth – $385, down 3.8 pct
Canberra – $390, down 2.5 pct
Darwin – $520, down 7.1 pct
Hobart – $280, up 12 pct
(Source: Domain Group Rental Report)