Taylor Scott International News
Last year was lackluster for residential property rental growth in cities in Australia with rents increasing by just 0.3%, the latest index data shows. Rents increased by 2.2% in Melbourne, by 1.9% in Sydney and Canberra, and by 0.6% in Hobart. They fell by 13.2% in Darwin, by 8% in Perth, by 0.3% in Brisbane and by 0.2% in Adelaide. ‘We’ve never seen rental growth as sluggish as it is at the moment. Furthermore, we’re expecting to see more of the same over the coming months due to increases in the supply of new housing, rental stock and a further slowdown in migration rates,’ said CoreLogic RP Data research analyst Cameron Kusher. The CoreLogic RP Data index also shows that combined capital city rental rates are at $483, an increase of just 0.3% over the past 12 months which is a record low rate of annual growth based on records back to December 1996. A comparison between December 2015 and December 2014 shows in 2014 annual rental growth was slowing but was tracking at a much higher 1.8% which highlights just how much the rental market eased throughout 2015. ‘The construction boom across the capital cities, coupled with slowing population growth, low mortgage rates and the recent heightened level of activity from investors are the major contributing factors to the slowing rental growth in 2015,’ said Kusher. ‘Although Sydney and Melbourne saw the largest ramp up in new housing supply, both cities still recorded rental increases over the year, although rental growth is slowing relative to 12 months earlier,’ he explained. ‘It is clear that the increase in investment stock continues to provide landlords with little scope to lift rental rates while the low mortgage rate environment provides little incentive to push yields higher,’ he added. The firm predicts that growth in rental rates is likely to remain weak or potentially slow even further over the coming months. The good news for those looking to rent is the possibility that rental rates will fall even further over the coming year. ‘While the news for renters will be welcomed, investors may be facing weaker capital gains coupled with little in the way of rental growth or yield. The large pipeline of residential construction activity and recent high levels of investment demand means that renters are likely to continue to have plenty of choice,’ added Kusher. Taylor Scott International
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