House prices have started to rise again but rents have not. Rents fell 0.2 per cent in the capital cities in September – the third consecutive month of falls.
According to the latest CoreLogic Quarterly Rental Review, rents were down 0.3 per cent in Sydney in September, down 0.1 per cent in Melbourne, down 0.3 per cent in Canberra and down 0.1 per cent in Perth.
Brisbane rents were unchanged, and Adelaide was the only capital to record an increase, with rents rising 0.1 per cent.
Over the September quarter capital city rental yields fell 0.5 per cent.
With prices picking up, while rents continue to fall, yields on rental property are down. The average gross rental yield is 3.99 per cent, compared with 4.14 per cent in the June quarter.
Darwin has the highest average yield, at 6 per cent, followed by Hobart (5.2 per cent) and Canberra (4.7 per cent).
The average yield in Sydney is 3.2 per cent, in Melbourne 3.5 per cent, in Brisbane 4.6 per cent in Adelaide 4.5 per cent and in Perth 4.3 per cent.
Rentals yields on units were uniformly higher than yields on houses.
In previous commentary on the rental market, CoreLogic has said: “With gross yields at such low levels in [Sydney and Melbourne], we may start to see investors turn their attention to other cities where housing is more affordable, capital gain opportunities are potentially better and rental returns superior.
“As interest rates continue to fall and yields across most asset classes soften, rental returns from housing may become more appealing.
“Historically, investors have targeted capital growth but going forward investing for rental returns during an ultra-low interest rate environment may become increasingly popular.”