Rent values increased 0.3% nationally over the month of March. Despite rental value increases, this has decelerated from a recent peak growth rate of 0.5% in January 2020.
Eliza Owen, Head of Research Australia provides analysis on the March quarter results “Prior to this March slowdown, the CoreLogic hedonic rental index had seen an upswing in values since September 2019. This occurred against slight moderations in new dwelling completions, which fell -7.6% over 2019 from the previous year, and lessened the addition to supply in the rental market.”
“Steady overseas migration also contributed to added demand in the rental market over 2019. It has been documented that overseas migrants typically initially rent when they first arrive from overseas. However it is worth noting that overseas migration rates had started to slow a little by September 2019.” said Owen.
Also noting “A deceleration in the growth of rents, as well as a decline in some areas, signals that this growth momentum is facing disruption. It is worth noting that rent data for the March quarter would capture little of the impact from COVID-19, where the regulations of social distancing that have been most disruptive to the economy commenced on March 23rd.”
Key Findings- March Quarter Rental Review
- National rents increased 0.3% over the month of March, and 1.2% on a quarterly basis to be 1.4% higher over the year. Growth rates decelerated over the month, and are likely to experience further downward pressure amid the COVID-19 crisis.
- Capital city rents are 1.3% higher over the quarter and 1.0% higher year-on-year. Regional rents are 1.0% higher over the quarter, and 2.6% higher over the year.
- Six of the capital city dwelling markets experienced a month-on-month increase in rent values, led by Perth, where rent values rose 0.8% in March. Brisbane rents were flat over the month, and Hobart rent values declined 0.4%
- In March 2020, Sydney remained the most expensive rental market, with a current median rental value of $577/week. The differential between Sydney and the second most expensive rental market, Canberra, has trended down to just $1.
- Despite signs of weakening conditions in the month of March, the overall quarter results show rental increases in all capital city regions, led by a 1.7% increase across the Perth.
- Gross rental yields are currently recorded at 3.76% nationally compared to 3.78% at the end of the previous month, and 4.10% a year ago.
- In the 12 months to March, rental yields fell across six of the eight capital city markets. Yields rose 8 basis points across Adelaide dwellings, and by 15 basis points across Canberra dwellings.
- In the first quarter of 2020, regional rental yields slipped 6 basis points to 4.97%. The combined capital cities regions fell 5 basis points in the quarter to 3.46%.