Weekly rents have continued to fall over the past year

Based on the CoreLogic May monthly rental review released today, while rents increased slightly by 0.1% in April, overall, capital city rental rates edged lower, falling 0.2% over the past 12 months.

Key Findings:

  • Rental rates are currently $490/week for houses and $467/week for units across combined capital cities;
  • Five of the eight capital cities saw a modest rise in rents over the past twelve months, including Sydney (1.4%), Melbourne (1.7%), Adelaide (0.5%), Hobart (1.1%) and Canberra (2.5%);
  • Perth (-8.9%) and Darwin (-12.6%) experienced large drops in rents & have collectively pulled the combined capital average lower;
  • Brisbane rents dropped by -0.6%.

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Research analyst Cameron Kusher said, “We anticipate that the weakness in the rental market will persist over the year and rents will continue to fall over the coming months. The annual change in rental rates continues to be at its slowest pace since before 1996.”

“At the same time last year, rental rates increased by 1.7% which indicates a sharp slowdown in rental growth over the past year.”

“Factors contributing to a slowing in rental growth include falling real wages, excess rental supply in certain areas and lower rates of population growth - all of which have impacted on demand for rental accommodation.”

“With dwelling approvals at recent record highs and construction activity set to peak over the next 24 months, accompanied by many new properties still to settle, we anticipate that the weak rental market conditions will persist with rental growth continuing to slow and, or, fall in most capital cities.”

“Based on current market conditions, landlords won’t be in a position to lift rental rates and may actually need to reduce rents in order to keep their tenants. We see renters as holding a stronger negotiation position and where they now have the potential to upgrade into higher grades of accommodation for a similar, or lower rents,” Mr Kusher said.

Canberra is the only capital city where the annual rental change is currently stronger than it was a year ago. Mr Kusher said this highlights the weakness in rental market conditions is being felt across all other capital city markets.

With rental rates increasing in some cities in April, rates in Sydney, Adelaide and Hobart are at record highs. In all remaining cities, rental rates are now below their highs with the declines recorded respectively in: -0.1% in Melbourne, -0.8% in Brisbane, -13.7% in Perth, -17.3% in Darwin and -5.4% in Canberra.

The results show that as rental changes outpace home value changes, gross rental yields have trended lower and have hit record lows of 3.3% for houses and 4.2% for units.

Mr Kusher said, “In our two largest capital cities, we’ve seen rental yields move to record lows of 3.1% for houses and 4.0% for units in Sydney and in Melbourne, rental yields are at a record low 2.9% for houses and 4.0% for units.”

“With home values continuing to grow and rental markets expected to soften further, don’t be surprised if we see a further compression of gross rental yields over the coming months,” he said.

Ends.


For additional information contact: media@corelogic.com.au or 1300 472 767


About CoreLogic

CoreLogic Australia is a wholly owned subsidiary of CoreLogic (NYSE: CLGX), which is the largest property data and analytics company in the world. CoreLogic provides property information, analytics and services across Australia, New Zealand and Asia, and recently expanded its service offering through the purchase of project activity and building cost information provider Cordell. With Australia’s most comprehensive property databases, the company’s combined data offering is derived from public, contributory and proprietary sources and includes over 4.4 billion decision points spanning over three decades of collection, providing detailed coverage of property and other encumbrances such as tenancy, location, hazard risk and related performance information.

With over 20,000 customers and 150,000 end users, CoreLogic is the leading provider of property data, analytics and related services to consumers, investors, real estate, mortgage, finance, banking, building services, insurance, developers, wealth management and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and geo spatial services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. CoreLogic employs over 650 people across Australia and in New Zealand. For more information call 1300 734 318 or visit www.corelogic.com.au.

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