Melbourne apartment rents remained steady over March quarter: CoreLogic

Melbourne recorded the weakest growth in rents of the capital cities over the three months to March 2021, with house rents up 1.6%, while unit rents were unchanged over the quarter

Melbourne apartment rents remained steady over March quarter: CoreLogic
Melbourne apartment rents remained steady over March quarter: CoreLogic

Melbourne unit rents have fallen by 8.2% over the year and Sydney unit rents are 4.9% lower, according to CoreLogic’s Rental Review for the March 2021 quarter.

CoreLogic’s research director Tim Lawless blamed it on "a demand shock."

“The annual decline in rents across Australia’s two largest cities is attributable to falling rents in the unit sector, where closed international borders have created a demand shock in a market that was already challenged by high supply. 

“Some inner city precincts of Melbourne have seen unit rents fall by more than 20% over the past 12 months. 

"Prospects for a material improvement in rental conditions across these inner city high density precincts are largely dependent on a return of tenancy demand from international students and visitors, who were previously a key component of rental demand.

“Although rents are generally rising, housing values have been rising at a faster rate which has seen rental yields compress across most of the capital cities."

Lawless noted while Melbourne recorded the weakest growth in rents among the capitals over the three months to March 2021, house rents were up 1.6%, while unit rents were unchanged over the quarter.

Lawless noted the strong exceptions were Perth and Darwin where rents have risen at a faster pace than housing values, driving a rise in yields. 

"The opposite is true in Sydney and Melbourne where rental yields are plumbing new record lows," he said.

“Outside of Sydney and Melbourne, with mortgage rates so low, yields are generally high enough to provide investors with positive cash flow opportunities from the outset,” says Mr Lawless.
  
National gross rental yields were recorded at 3.55%, down from 3.71% over the December quarter and 3.76% a year earlier as dwelling values outperform rental growth.

Darwin was the highest yielding capital city, up 21 basis points over the month to 6.21%. 

Sydney remains the lowest yielding at 2.74%.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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