Units have shown better rental growth than houses in a relatively flat quarter, says a new report.
Australian Property Monitors (APM)’s latest quarterly rental report has revealed that while rental growth remained “largely flat” in the three months leading up to June, units had a relatively strong quarter with national growth coming in at 3.5% for the quarter. This brings annual growth for units to over 4%, compared to just 3.1% for houses.
The flat market indicates that landlords accepted renters may not have been as willing to agree to rental increases recently, says APM economist Matthew Bell. “Higher mortgage costs have hit some landlords hard, but weak consumer spending and concerns over the global economy, reflected in the fall in the local share market, has meant that landlords have been conservative in raising rents compared to the March quarter. Also, the exodus from the rental market to the ownership market that occurred in 2009 is still having an effect on asking rents in most capitals.”
This has meant that rental yields have plummeted year-on-year as price growth has outstripped rental growth. Bell believes that the current situation is unlikely to last, however.
“As leases expire and are renewed, it is expected that a robust employment market, rising incomes and the low vacancy rates in most capitals will start seeing asking rents increasing again – as we’re already seeing in Sydney,” he added.
Indeed, only Sydney showed an increase in rental prices for both houses and units in the quarter, with the rest of the major capital cities saw rents falling for houses or remaining stable.
