Rental rates grew at a slower rate in the first quarter of 2018, with Hobart being the best performing capital city. (CoreLogic)
On average Australians are paying $427 per week in rent with rents rising 1.1 per cent in the first quarter of this year.
- The national median rent is $427, which rose 1.1pc in the March quarter
- Rental rates in regional areas rose faster than capital cities
- Sydney and Melbourne, the most expensive property markets, had the lowest rental yields
Sydney-siders paid the highest median rent ($582 per week), while Adelaide residents paid the least ($374) out of all the capital cities.
But it was Hobart’s landlords who scored the best deal with rents increased by 5 per cent in the last quarter, and 11.7 per cent in the last twelve months.
Property in the Tasmanian capital are also currently enjoying the second highest rental yield in the country (5 per cent) — second only to Darwin (5.8 per cent), according to key findings from data analytics firm CoreLogic in its Quarterly Rental Review.
Slow start to the year
Rental rates, on a national basis, lifted by 1.5 per cent in the first three months of 2017. In comparison, they rose by a slower 1.1 per cent between January and March, this year.
“The first quarter of each year is typically the strongest for rental growth, so this is a step down,” CoreLogic’s head of research Cameron Kusher said.
“Investors remain most active in NSW and Victoria, and have been targeting capital growth rather than rental return.”
Indeed, Sydney and Melbourne have the lowest rental yields — 3.2 per cent and 2.93 per cent. The median yield across the country was 3.68 per cent.
Mr Kusher said Sydney had its weakest first quarter since 2009, while Melbourne’s was its slowest since 2012.
What’s behind Hobart’s growth?
Hobart is not only seeing its rent increase at the fastest rate, it is also experiencing the biggest jump in property prices.
“Clearly there’s a lot of demand for rental properties, and there’s not enough of them around,” Mr Kusher said.
“Hobart had a shortage of apartments and hotel accommodation for a number of years.
“So we’re seeing increasingly a lot of the longer term rentals being offered short term — especially with the prevalence of Airbnb.”
Essentially, it’s a case of not enough supply available to meet the demand.
Regional areas outperforming the capitals
In the last twelve months, the combined capital cities saw their rental rates rise by 1.9 per cent. Rents in regional areas of Australia, in contrast, jumped 3.1 per cent.
Regional areas close to capital cities experienced rapid rent increases.
This includes the areas near Sydney (Wollongong, Newcastle and Lake Macquarie) and Melbourne (Geelong, Bendigo and Ballarat).
The reason for this is an “affordability story”, Mr Kusher said.
“People are now moving to these coastal locations, and not buying a property in the initial stages, driving up rental demand.
“Keep in mind, rental demand in a lot of the regional areas has been fairly weak in recent years.”
Where to from here?
Mr Kusher’s forecast is that the capital cities (except for Hobart) will continue to experience slowing rental growth.
“Rents will probably slow down in capital cities and regional markets over the coming quarters.
“But I still expect regional areas to outperform the capitals.”