There has been some great news for tenants across Australia as new figures from RP Data confirm what I have thought for some time – rents have fallen in some parts of Australia in the June quarter. There is of course a tipping point that is reached where the simple equation of wages growth becomes a major contributor to slowing down rental price growth.
National weekly house rents have fallen by around 3.5% or $15 each week over the June quarter although apartments have fallen by just 0.6% nationally over the same period. Like all pricing – sales or rentals – it is extremely local in its movement and it must be emphasized that each State, City and Suburbs within cities are unique.
Perth recorded the largest fall in apartment rental prices, falling by 4%, followed by Melbourne at just under 2% and Canberra units by around 1.5%. However bucking the trend, Adelaide and Darwin apartments increased their average weekly rents by around 2.5%, with Brisbane apartments increasing by just over 1% each week.
All capital cities except Darwin recorded decreases in rental prices for houses with Canberra sliding by a little over 6% for the quarter. Darwin is now the most expensive city in Australia for renting a house, increasing by almost 6% during the quarter.
Rental yields have dropped on average by 0.3% across the country as property prices around the first home owner level have increased. I urge all owners again to remember that real estate pricing is cyclical and local and small fluctuations can occur constantly depending on sample size, number or sales, type of properties, season and of course statistical error.
Overall apartment yields have held up a little better than houses nationally, falling only 0.1% on average as apartments generally have appreciated in value by less than houses. Without question rental prices are under pressure to move upward due to population growth and additional building is required to satisfy demand.
There are many who cannot afford to enter the sale market due to factors including lack of deposit, unemployment, underemployment and choice. Wages will always be a major factor in limiting rental values and despite the current economic climate property still represents a very valuable long term investment. The State and Federal Governments have done little to address the housing affordability crisis and we should expect further increases in the nearer term.