Rental growth slows, yields deteriorate

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By Leith van Onselen

RP Data has released its quarterly rental review, which revealed a sharp slowing of rental growth across Australia, with national house rents experiencing 0% growth over the March quarter, whereas unit rents grew by 1.3%. In the year to March, house rents rose by only 1.3% nationally, whereas unit rents rose by 2.6% (see below table).

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According to RP Data’s Cameron Kusher:

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“With home value growth comparatively strong we are seeing a deterioration of rental yields in most capital cities. We expect that rental growth is like to continue at moderate levels over the coming year, due largely to the climbing demand for housing which is highlighted by escalating sales transactions nationally.

“A slow down across some of the previously strong resource intensive areas of Australia can be attributed to a downturn in overall housing market conditions within these regions”.

It’s a good thing most property investors don’t invest for cash flow or yield.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.