Rents climb, but at slower pace than last year: CoreLogic

Rental rates climb over seasonally strong first quarter - but at a slower pace than in 2017, according to CoreLogic's first Quarterly Rental Review for 2018 

Typically the first quarter of the year is the strongest for rental appreciation and growth.

Nationally, rents climbed by 0.3 per cent in March to be 1.1 per cent higher over the first quarter of 2018 and 2.2 per cent higher over the 12 months to March 2018. 

In comparison to the first three months of 2017 when rents increased by 1.5 per cent, the growth in rental prices has slowed (-0.4 per cent).

Click here to enlarge.

Rental growth over the first quarter is higher in the regional markets (+1.2 per cent) than in the capital cities (+1.0 per cent). This trend is also reflected in activity over the past 12 months – rents are up 3.1 per cent in the regions compared to an increase of 1.9 per cent across the capitals.

Over the first quarter, rents climbed in all capital cities except for Darwin (-0.3 per cent). The highest quarterly rental increases were in Hobart (+5.0 per cent), which also reported its strongest first quarter growth on record, and Canberra (+2.3 per cent).

Over the past 12 months, Hobart reported the highest growth in rental rates (+11.7 per cent). Rents climbed higher in all capital cities except Perth (-1.3 per cent) and Darwin (-1.6 per cent).

The national median rent is $427 ($426 for houses and $430 for units). Across the capital cities, the median rental is $459 per week. The median house rental in the capital cities is $460 compared to $453 for units. Across the regional markets, both houses and units averaged $355 per week.

At $374, Adelaide has the cheapest weekly rent out of all the capital cities. The highest median weekly rent is in Sydney, where the cost is $582.

Rental yields have increased nationally by 0.1 per cent over the past 12 months to 3.68 per cent. The highest rental yields are in Darwin (5.83 per cent) and Hobart (5.01 per cent). Melbourne (2.93 per cent) has the lowest rental yields, followed by Sydney (3.20 per cent).

CoreLogic researcher Cameron Kusher says the data shows the rental market has softened.

“The data suggests that in most capital cities the rental market has softened, 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.”

“Rental yields are climbing slightly from historic low levels however, they remain lower than they were a year ago.

"Investors remain most active in NSW and Vic 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.”