Rents soaring in Perth and Darwin: APM
Rents soared in Perth and Darwin over 2012 but hardly moved in the other capital cities, according to the December quarter update from Australian Property Monitors (APM).
Rents are forecast to continue to rise in the two mining-driven cities as well as in Brisbane and Sydney in 2013, but Melbourne rents are expected to remain flat and could fall.
The top-performing rental growth market over 2013 was Darwin units, where weekly rents increased by 19.6% over the year from $525 to a median $550.
The second best performing market was Perth houses, which registered a 17.5% increase in weekly rents, from $450 to $470 per week.
Double-digit rental growth was also recorded for Perth units (up 14.3% to $400) and for Darwin houses (up 16.1% to $750).
According to November SQM Research figures, Darwin has a vacancy rate of 1.1% and Perth a vacancy rate of just 0.7%.
Sydney and Melbourne weekly rents were largely unchanged over the course of the year, with Sydney having a vacancy rate of 1.8% and Melbourne a vacancy rate of 3.2%.
Darwin is the most expensive capital city market to rent either a house or a unit.
Perth and Brisbane offer the highest median rental yields for houses (5.27%), with the highest unit yields in Darwin (6.22%).
APM chief economist Dr Andrew Wilson says the increase in Perth rents is being driven by a wave of new arrivals, estimated at 1,500 people per week with high competition for available rentals and low supply of new properties over the past few years.
Similar demand and supply fundamentals are driving the Darwin market.
Wilson expects rental growth to continue in Perth, Darwin and Brisbane in 2013 and for rental growth to resume in Sydney
No rental growth is tipped for Melbourne, Adelaide, Canberra or Hobart, and Wilson says Melbourne rents could fall in 2013.
December quarter figures tell a similar story, with Brisbane also showing signs of rental growth.
Over the quarter, rents increased for Brisbane (2.6%) and Hobart (3.2%) houses, with Perth still the standout house rental market with a 4.4% quarterly gain.
Darwin was the strongest performing unit rental market over the quarter, with weekly rents in the Northern Territory capital city up 4.8% over the quarter, with unit rental gains also recorded in Perth (2.6%) and Brisbane (1.4%)
Nationally, median asking rents for houses was stable at +0.8%, and units the same at 0.2 per cent over the three months ending December 2012.
Commenting on the December quarter figures, Wilson says apart from Perth, Darwin and Brisbane, rents remain stable in other capital cities.
He says the improved rental situation in Sydney is due to reduced demand as a result of increased buyer activity – particularly from first-home buyers.
However, he says underlying demand for rental properties remains strong in Sydney due to a shortage of accommodation driven by a “chronic shortfall of new supply.
Melbourne remains the most tenant-friendly property market in Australia, with low competition for rental properties and a higher vacancy rate driven by a “solid supply of new accommodation".
The APM outlook differs with preliminary data from the Real Estate Institute of Western Australia which reported Perth’s rental market showed signs of easing towards the end of 2012.