Rental rates across the combined capital cities were unchanged in September however, rates fell in most individual capital cities.
According to analysis from CoreLogic RP Data, rental rates across the combined capital cities were unchanged in September however, rates fell in most individual capital cities. The annual rate of change has continued to slow over the month reaching a new historic low of 0.5%.
Dwelling rental rates across the combined capital cities are recorded at $483 per week and they have increased by just 0.3% over the first three quarters of the year while they have risen by 0.5% over the past 12 months. The data points to an ongoing softening of rental growth. The 0.5% rise in rental rates over the past year is the slowest rate of rental growth on record based on data which goes back as far as December 1995. The construction boom across the capital cities coupled with slowing population growth, low mortgage rates and the heightened level of activity from investors are the major contributing factors to the slowing rental growth. Three of the cities which have seen the largest ramp up in new housing supply and investor activity over recent years; Sydney, Melbourne and Brisbane, have continued to record rental rises over the past year however, each city is seeing a slowing in the pace of rental growth. It is clear that the increase in investment stock is providing landlords with little scope to lift rental rates while the low mortgage rate environment provides little incentive to push yields higher.
Looking across the individual capital cities, over the past year, Sydney and Melbourne have recorded the greatest increases in weekly rents however, their rates of growth have slowed relative to a year ago. Over the past month, weekly rents have moved lower across every capital city except Sydney where they were unchanged and in Melbourne and Hobart where they rose. Over the past three months rents are lower in all capital cities.
Index results as at September 30, 2015
Weekly rents continue to rise at their slowest annual pace on record:
- Weekly rents were unchanged in September, taking the annual pace of rental growth across the combined capital cities to a new record low of 0.5% over the year.
- Despite recording the strongest growth, Melbourne rents rose just 2.1% over the year.
- Rents have fallen over the year in Perth and Darwin.
- Combined capital city rental rates are recorded at $487/week for houses and $462/week for units.
- It is anticipated that the rate of rental growth will continue to slow over the coming months due to increased supply of housing and rental stock and slower migration rates.