Its not a good time to be a property investor. A speculator yes, as capital gains remain in the double digits in Sydney and Melbourne, but for investors seeking yield (or to pay off their megamortgage), last year was the worst on record , according to CoreLogic/RP Data.
Just 0.3% growth! More from Cameron Kusher:
We’ve never seen rental growth as sluggish as it is at the moment. Furthermore, we’re expecting to see more of the same over the coming months due to increases in the supply of new housing, rental stock and a further slowdown in migration rates.
“The only cities to see an increase in weekly rental rates were Sydney with an increase of 1.9%, Melbourne (2.2%), Hobart (0.6%) and Canberra (1.9%) while rates fell in Brisbane by (-0.3%), Adelaide (-0.2%), Perth (-8.0%) and Darwin (-13.3%),” Mr Kusher said.
Market Snapshot:
- Combined capital city rental rates are $486/week for houses and $464/week for units
- Dwelling rental rates across the combined capital cities are recorded at $483 per week and they have increased by just 0.3% over the past 12 months which is a record low rate of annual growth (result based on records back to December 1996).
We envisage that growth in rental rates is likely to remain weak or potentially slow even further over the coming months. In fact there is the possibility that rental rates will start to fall on an annual basis.
While this is great news for renters, investors are facing the prospect of weaker capital gain coupled with little in the way of rental growth or yield. The large pipeline of residential construction activity and recent high levels of investment demand means that renters are likely to continue to have plenty of choice.
Given that only 33% or so of Australians rent, this is an outrage! Prices must go higher! 2nd class citizens cannot pay less rent! Its just unAustralian!
Here’s a table snapshot of the index results:
While the annual change in house rental rates is sliding into negative, the base rate is slipping into the mid 3% region:
By capital city – Darwin and Perth rents have crashed – Canberra and Melbourne doing well:
Investors must be hoping there’s no more supply coming on the market soon to squeeze those gross yields even further. Luckily, there’s not much construction going on:
