Rents continue to rise despite national building boom: Domain
Unit rents increased at record levels over the March quarter for the majority of capital cities despite a national apartment building boom, according to the March Quarter Rental Report from Domain.com.au.
The report found unit rents increased in Sydney, Melbourne, Brisbane, Hobart and Canberra over the March quarter, staying at record levels despite the recent unit building boom, while house rental vacancies remain low in most capitals.
Capital city vacancy rates were steady at 2.1 percent for houses but fell slightly for units to 2.3 percent, with overall dwelling vacancies remaining at 2.2 percent.
Domain.com.au senior economist Dr. Andrew Wilson said despite the recent influx of home building, we can expect to see upward pressure on both house and unit rents in most capital cities continuing in the foreseeable future.
"The clear exceptions to tight capital city rental markets are Perth and Darwin. Rents in these cities continue to fall reflecting the impact of the downturn in the resource economy and the end of the significant rental demand driven by a fly-in fly-out workforce," he said.
"Sydney median unit rents increasing sharply over the March quarter.
“Despite the significant numbers of new apartments entering the market, Sydney unit rents bounced back this quarter with a sharp 4 per cent increase in the median weekly rental. This increase offers no relief for tenants with house rents remaining at record highs and already low vacancy rates continuing to tighten. The median unit rent was recorded at $520 per week, closing in on the $530 median weekly rent for houses. Sydney unit rents have now increased by 4 percent over the past year – second to Melbourne for annual growth.
The report found Melbourne house rents came in at $400 per week, up 2.6 percent over the year and unit vacancy rates falling despite the recent surge in new supply.
"It has been a positive quarter for investors in Melbourne with unit rents now rising to record levels and vacancy rates falling, despite an unprecedented new apartment boom. Melbourne house rents remain at peak values as well, with low vacancy rates indicating no relief in sight for tenants," he said.
“Brisbane tenants in units and houses have experienced rising rents, with both at record highs. Vacancy rates do remain reasonably balanced, however, with some slight tightening for units in the March quarter."
Gross rental yields for investors held over the March quarter, with Hobart having highest gross returns for houses at 5.6 percent and rising. Sydney had 3.3 per cent.
