Sydney no longer the nation’s most expensive capital city to rent a house: Domain

House rents in Sydney have declined annually for the first time in more than 12 years and are now back to 2016 levels, according to the latest research released by Domain.

They found that house rents declined 1.8 per cent over the quarter and the year to $540 per week, while rental yields increased 0.9 per cent over the quarter and 4.2 per cent over the year to 3.24 per cent. 

Unit rents declined 2.8 per cent over the quarter to $530 per week and rental yields increased 0.1 per cent over the quarter and 1.7 per cent over the year to 3.87 per cent. 

For the first time since 2004 unit rents have fallen for two consecutive quarters.

The cost of renting a unit is now at 2017 levels.

For the first time in 11 years the cost of renting a house in Canberra is now higher than Sydney, according to the latest data from Domain.

The difference in weekly house rents between Canberra and Sydney has jumped to $20.

Canberra house rents increased 1.8 per cent over the quarter and 3.7 per cent over the year to $560 per week, while rental yields improved 1.4 per cent over the quarter and 0.6 per cent over the year to 4.36 per cent. 

Unit rents increased 3.3 per cent over the quarter and 8.1 per cent over the year to $465 per week.

Domain research analyst, Dr Nicola Powell said available rental stock continued to increased over the year, with development completions adding to the pipeline of supply.

"We expect rental supply to increase further in 2019, putting tenants in the driver’s seat. Tenants will find greater bargaining power as rising supply keeps pressure on rents, providing strong grounds to negotiate lease terms. Landlords will be keen to retain good tenants as leases expire, with incentives and rental discounts a realistic prospect.”

“Gross yields are nearing a two-year high, suggesting rental prices are holding firmer than property values. Despite improved yields, we expect many investors will look to other capital city markets in 2019, with the prospect of short-term capital gains unlikely.

"This could serve to tighten rental supply over the long term. However, slowing interstate and overseas migration could offset this impact,” she concluded.

Melbourne house and unit rental prices continue to rise, with both achieving new record highs, according to the latest research from Domain.

Domain found, Melbourne house rents increased 2.3 per cent over the quarter and 3.5 per cent over the year to $440 per week, while rental yields improved 1.4 per cent over the quarter and 4.4 per cent over the year to 3.20 per cent. 

Available Brisbane rental stock has been sliding since the end of 2017, and is now at a three and a half year low, according to the latest research from Domain.

House rents increased 2.5 per cent over the quarter and year to $410 per week, while rental yields declined 0.3 per cent over the quarter but increased 1 per cent over the year to 4.62 per cent. 

Brisbane unit rents increased 1.3 per cent over the quarter and 2.7 per cent over the year to $380 per week.

However, rental yields declined 0.2 per cent over the quarter but improved 3.7 per cent over the year to 5.12 per cent.

“If rental stock keeps shrinking, greater competition between tenants will emerge, putting further upward pressure on rental prices, a marked change given the prolonged period of stability," Domain research analyst, Dr Nicola Powell said.

"House and unit rents are already displaying a higher pace of growth relative to last year, with houses recording the first positive movement and units the strongest gain on an annual basis in roughly three years.”

“Population growth in the sunshine state has been driven in fairly equal measure by natural increases, interstate migration and overseas migration. Queensland is the only state or territory to have such balance, which has helped to support a broad-based demand for housing. Job prospects, an improving economy and greater housing affordability continues to lure residents from NSW and Victoria.”

“Given property prices have fallen in Sydney and Melbourne, investors have already started to find Brisbane a more attractive option as they seek better yields and growth potential. Investors will be further enticed north as rental prices and gross yields continue to improve,” she concluded.