Prices may be shakey but rents have kept rising

Posted on 20/03/2009  

Rents are going up … and up and up … according to the latest Property Pulse report from RP Data. 

It says median prices may be falling in some areas, but one strong aspect of the market is growth in rents for houses and units.


The report says all property types across each capital city recorded rental growth in 2008, with an average increase of $41 per week for houses and $35 per week for units.

Darwin has been the standout performer: weekly rents for Darwin houses climbed $70 per week (18%) and unit rents $60 (19%). Although Darwin also recorded the greatest increase in prices through 2008, it has maintained the country’s best yields - 6.25% for houses and 6.44% for units, according to RP Data.

 

Darwin remains the most expensive city for tenants of houses, with $470 per week typical – compared to $450 in Sydney and $435 in Canberra. But Sydney has the most expensive unit rents (a median of $400 per week).


Sydney’s median house rents rose 18% over the year and unit rents increased 14%. Close behind was Melbourne, where rents for houses increased 17% and for units 14%.

RP Data says Adelaide and Canberra under-performed. Adelaide house rents rose just 5%  and unit rents 4%. Canberra’s median weekly rent for houses increased 4% and units by 6%.

It notes that some Local Government Areas (LGAs) performed particularly strongly during 2008. The Top 3 for houses were mining areas: Belyando and Broadsound in Central Queensland and Port Hedland in WA. “Belyando and Port Hedland in particular have seen astronomical growth in rents through 2008, largely driven by a shortage of housing,” the report says. According to the report, typical house rents in Belyando rose from $600 per week to $1,100 per week, while those in Port Hedland increased from $800 to $1,150.

Outside of the resource areas, the more affluent suburbs of inner Sydney and inner Perth have seen strong rent increases - despite the fact that many of these areas have recorded value falls and have been hampered by a slow rate of sales. The leading areas for growth in unit rents are mainly inner-city areas and waterfront precincts (this is not surprising given that the report focuses on the dollar increase in rents, rather than the percentage increase). Exceptions include Kalgoorlie-Boulder in WA and Bassendean east of the Perth CBD.

The report predicts continuing strong rental growth in 2009 - although perhaps not as strong as in 2008. “Vacancy rates throughout the country remain tight and although the Government is offering attractive incentives for first-home buyers, mnny are still not in a financial position to purchase,” it says.

Recent data from the Real Estate Institute of Australia shows that vacancy rates are below 2% in all Australian capital cities except Perth (2.4%) and Canberra (2.3%).

ENDS

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