Sydney's 16.2% year on year growth straining yields: RP Data

Sydney’s house prices are rising so much that yields will soon fall below those in Melbourne, according to RP Data’s latest statistics.

With 16.2% growth recorded for Sydney over the past 12 months, of which 1.8% was seen over the past month pushing it to 5% over the quarter, the RP Data Core Logic Home Value Index for August notes that Sydney’s yields are falling proportionately.

RP Data’s research director Tim Lawless said that given the rate of value growth and moderate rental growth, it won’t be long until the yields are below Melbourne’s.

“Over the past year we have seen Sydney’s gross rental yields fall from by 47 basis points, from 4.1% to 3.6%,” said Lawless.

“With yields so low in the cities where values are seeing the largest capital gains, it is clear that investors remain very much focussed on value growth rather than yield,” he said.

Sydney’s house yields are currently recorded at 3.6%, with units at 4.5%. Meanwhile, Melbourne houses were recorded at 3.2% and units at 4.2% representing a subtler drop and some 0.4% and 0.3% difference to Sydney respectively.