Rents stable or falling in all capitals bar Darwin and Hobart in March quarter: APM

Only Darwin and Hobart went against the national trend of static or falling rents over the March quarter according to the latest APM rental report.

The report found rents remained stable or fell during the March quarter in most capital cities, giving temporary relief to renters.

But senior economist at APM Dr Andrew Wilson says flat or falling rental growth for both units and houses in most capital cities has not resulted in falling gross rental yields.

The median weekly asking rent for houses in Australia was $409 for the March quarter, while median asking rent for units declined 1.1% to $401 over the same period.

Darwin had the greatest quarterly and yearly rent increase for houses but was the only capital where yields went down for houses. House rents rose 3.6% over the quarter and 11.8% over the year to $570 a week. House yields went up 9.6% over the year to 4.94%. Unit rents are down 2.1% over the quarter but up 2.2% over the year, while unit yields went up 11.2% over the year to 5.58%.

Hobart house rents increased, but the Tasmanian capital had the greatest yearly fall for unit rents. It was the only capital where unit yields went down over the year. It had the greatest yearly fall in yields for houses. House rents rose 3.1% over the quarter to $330 a week, up 1.5% over the year. House yields are down 1.4% over the year to 5.23%. Unit rents are unchanged over the quarter and down 3.7% over the year. Unit yields are down 1.3% for the year to 5.13%.

Sydney had the greatest quarterly fall for unit rents over the quarter. House rents remain unchanged over the quarter at $500 a week, up 2% over the year. House yields are up 5.8% for the year to 4.71%. Unit rents are down 2.2% over the quarter to $450 a week and unchanged over the year. Unit yields are up 3.7% over the year to 5.18%.

Melbourne had the greatest yearly fall for house rents. It had the greatest yearly increase in yields for houses. House rents remain unchanged over the quarter at $360 a week, down 1.4% over the year. House yields are up 11% over the year to 4.12%. Unit rents are unchanged over the quarter and over the year at $350 a week. Unit yields are up 4.6% over the year to 4.63%.

Brisbane had the greatest yearly increase for units. House rents are unchanged over the quarter at $380 a week, up 2.7% over the year. House yields are up 7.7% over the year to 5.08%. Unit rents are unchanged over the quarter at $365 a week up 4.3% over the year. Unit yields are up 6.6% over the year to 5.29%.

In Adelaide house rents are down 0.6% over the quarter and over the year at $338 a week. Yields for houses went up 6% over the year to 4.69%. Unit rents are unchanged over the quarter and over the year at $280 a week. Unit yields are up 4.2% over the year to 4.98%.

Perth had the greatest yearly increase in yields for units. House rents are unchanged over the quarter at $400 a week, up 3.9% over the year. House yields went up 10.8% over the year to 4.92%. Unit rents are unchanged over the quarter at $350 a week, up 2.9% over the year. Unit yields increased 16.6% over the quarter to 5.5%.

In Canberra hose rents are down 2% over the quarter at $490 a week, up 2.1% over the year. House yields increased 3.9% over the year to 4.97%. Unit rents are down 1.1% over the quarter to $435 a week up 1.2% over the year. Unit yields are up 3.7% over the year to 5.65%.

Wilson says increased buyer activity over the March quarter has taken some pressure off rental markets, but the reprieve won’t last long.

“Improved housing affordability with the bottoming of the price cycle, falling interest rates and an improved economic outlook has facilitated increased buyer activity in most capital cities particularly from first homeowners,” says Wilson.

“This has taken some demand pressure off rental markets with flat rental growth recorded over the March quarter as a consequence.

“However with ongoing shortages of accommodation, low levels of new supply and continued inactivity by investors, upward pressure on rentals can be expected to resume in most centres over 2012.”

He says this is particularly evident in Sydney where ABS figures show a 60% state-wide surge in first homebuyer loans over the last quarter of 2011 which has reduced demand for rental properties, particularly units.

“Units continue to provide higher gross rental returns compared to houses in all the mainland capitals,” says Wilson.

“Gross investment yield growth should track sideways from mid-2012 as prices and rental increases emerge concurrently.”

He says Melbourne continues to be most tenant-friendly capital.

Photograph courtesy of Flickr.