Rents register the largest increase in five years

The rental market ended 2021 with the largest increase in weekly rents in the past five years, thanks to the boom in regional areas.

Overall weekly rental prices have jumped 4.7% in the last three months to December, with the median now standing at $ 450, according to REA Group's latest PropTrack rental report.

The substantial increase was driven by regional markets, which posted gains of 5% per quarter and 10.5% per year in December.

New rental listings fell 27.2% in December, reaching the lowest number of rental listings since April 2010.

PropTrack's director of economic research, Cameron Kusher, said the lack of new listings and increased demand will keep the rental market under pressure for the next several months.

"The current tight rental conditions are also expected to lead to further increases in rental rates," he said.

Mr. Kusher said it would be interesting to see how the scenarios unfold once the international borders are reopened.

"Reopening the borders could pose other challenges, as the return of travelers, both at home and abroad, causes landlords to consider switching their rental properties from leases to long term to short term rentals, ”he said.

With the reopening of the borders, regional areas may see some easing of pressure as people begin to consider returning to the city.

"In capital cities, vacancy rates in Sydney and Melbourne are expected to tighten with the return of migration, which should lead to moderate rental growth in these markets," he said .

Under these favorable conditions, the investment is set to increase, which would prove to be a relief for tenants.

"With more investors buying properties, this in turn will increase rental supply and hopefully dampen some of the rising rental prices," Kusher said.

Biggest rental gains

Darwin experienced the strongest growth in rental rates among SA4 regions in the past year.

Richmond-Tweed, Mandurah, Sunshine Coast, and Perth-North West have also seen significant rent increases over the past year.

Rents have fallen 2.4% in Melbourne over the past year and have remained unchanged in Sydney.

However, Sydney and Melbourne experienced a large divergence in the annual rent cuts between houses and units.

House rents in Sydney increased 7.3% year on year, while unit rents were down 1%.

Over the same period, Melbourne rents increased 2.3% for houses and fell 6.1% for units.

Rental yields slightly lower

Rental yields were 4% in December, lower than 4.3% a year earlier.

As with rents, there is also a divergence in rental yields between different regions and housing types.

The regional areas recorded a rental yield higher at 5% than the 3.8% recorded in the capital cities. However, both posted minor declines.

Meanwhile, house yields were 3.8%, lower than the 4.1% rental yield for units.

"Although annual rental growth has generally been quite strong, real estate price growth has generally been higher, leading to lower rental yields in most areas over the past year. the year, "Mr. Kusher said.

"Despite the compression of yields, when you consider the yields of most asset classes due to historically low interest rates, housing is likely to continue to attract investors. investors. "

Photo by @victorfreitas on Unsplash.

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