Last week we released our monthly rental report for September which showed rental growth at its slowest pace on record. In this week’s Pulse we look at the capital city suburbs that have recorded the largest increases in rents over the past year.
The September Monthly Rental Report release showed that across the combined capital cities, rental rates are increasing at their slowest rate on record. Over the past year, capital city rents have increased by just 0.5% and the trend is pointing towards further slowing in rental growth over the coming months.
Over the past 12 months the rental growth performance has been mixed across the capital cities however, the common trend is that the rate of rental change is slowing. Over the year rents have increased in Sydney (1.9%), Melbourne (2.1%), Brisbane (0.5%), Adelaide (0.1%) and Canberra (1.0%). Rental rates have fallen over the past year in Perth (-5.8%) and Darwin (-11.4%). More recently the rate of rental growth has slowed with rental rates falling in each city over the past quarter. While the broad figures certainly tell a broad story, as always there are certain suburbs recording much stronger rental growth as well as those seeing much greater falls. The lists included in this week’s Pulse show the suburbs with the greatest rental increases over the past year. The data is based on advertised rents and only includes those suburbs that have had at least 40 rental advertisements over the year.
Across the capital cities, Collaroy in Sydney has seen the greatest increase in house rents over the year, up 31.6%. Although there is some variation across cities, it is generally the areas of the city with higher priced housing stock that have seen the greatest rental rises over the past year. Melbourne’s results show Mornington Peninsula suburbs as being prominent on the list while at the same time this area of Melbourne has been one of the weakest performing regions for value growth over recent years. Note that in Darwin all suburbs listed have actually seen rental falls over the past year highlighting the weakness in the city’s rental market.
Top 5 suburbs in each capital city for house rental increases, 12 months to Sep-15
For units Cremorne in Melbourne has seen the greatest annual rental increase, up 28.3%. The unit list is a little more varied than the list for houses with most cities seeing a variety of suburbs appearing. It is interesting to note that with a record boom in unit approvals we aren’t seeing any of those suburbs which are synonymous with significant new unit development on the list. The suburbs listed tend to be more established markets rather than emerging unit markets.
Top 5 suburbs in each capital city for unit rental increases, 12 months to Sep-15
With new dwelling construction booming we anticipate that rental growth will continue to slow and may start to fall at a macro level, however there will always be a great deal of variation below the capital city level and from region to region. Landlords that own properties in desirable locations with fewer competing properties for rent stand the best chance of avoiding rental falls. On the other hand, over-supplied rental markets are going to be more susceptible to rental falls over the coming months and years.
Article by Cameron Kusher, CoreLogic RP Data Senior Research Analyst
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