RP Data: Rental growth hits another record low

By Leith van Onselen

Following on from my post yesterday on RP Data’s daily dwelling values index results for August, Core Logic-RP Data has released its full results, which also cover the smaller capitals and regional areas (see next table).

As you can see above, the smaller capitals and the regions had a mixed month in August, with rises recorded in Darwin (+0.3%) and “rest-of-state” (+0.1%), but falls recorded in Hobart (-1.1%) and Canberra (-1.7%).

Growth momentum has also slowed marginally:

Below are some charts summarising value changes at the state and territory level:

Meanwhile, rental growth has shifted to a record low, according to RP Data’s figures, forcing down rental yields:

Across the combined capital cities, the median weekly rental rate rose by just 0.7 per cent over the past twelve months, with house rents up 0.5 per cent and unit rents up a higher 1.6 per cent.

Since May 2013, dwelling values have risen at a faster pace than weekly rents. “The result of the disparity between dwelling values and dwelling rents has been a consistent downwards trend in gross rental yields. Gross yields are at record lows in both Sydney and Melbourne. A typical dwelling is attracting a gross yield of just 3.3 per cent and 3.1 per cent respectively across Australia’s two largest cities.

Mr Lawless said that the low yield scenario has largely been overlooked by investors who appear to be more focused on chasing future anticipated capital gains rather than aiming for cash flow…

Full report here.