Cheaper to rent than to buy in Sydney: SQM
Gross rental yields have decreased to the point where it’s cheaper to rent than to buy this year according to SQM’s latest index, which measures implied gross rental yields.
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The new index looks at rents before costs such as agent fees, council fees, maintenance and taxes divided into the median sale price for the locality.
It finds there has been a moderate decline in yields for houses over the course of this year while unit rental yields have remained stable.
In Sydney rental yields have been falling as house prices rapidly increase.
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Rental yields for houses in Sydney is about 3.7%, and 4.5% for units.
“They are actually very tight yields and would suggest to us that in Sydney at least, it’s cheaper to rent right now than to buy when just considering year one cash flows,” SQM’s Louis Christopher says.
Darwin has the highest capital city yields with yields for both houses and units at 5.5%.
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“Yields in Darwin may well rise in the future as right now we are recording rising rents for that city, while it seems dwelling prices have stalled of late,” Christopher says.