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- Darwin and Perth have led the pack as the March 2021 quarter witnessed a surge in national rental rates of 3.2 per cent
- However, the drivers of this growth are diverse, according to CoreLogic’s Rental Review report
- Across the combined regional markets, rents rose 4.1 per cent in the first quarter of the year while rents in the combined capitals increased 2.9 per cent
- Capital city house rents were up 3.3 per cent while regional houses rose by a higher 4.0 per cent in the three months to March
- According to CoreLogic, Melbourne unit rents have fallen by 8.2 per cent over the year and Sydney unit rents are 4.9 per cent lower
Darwin and Perth have led the pack as the March 2021 quarter witnessed a surge in national rental rates of 3.2 per cent.
However, the drivers of this growth are diverse, according to CoreLogic’s Rental Review report.
Across the combined regional markets, rents rose 4.1 per cent in the first quarter of the year while rents in the combined capitals increased 2.9 per cent. Regional units recorded the highest quarterly rental growth of 4.8 per cent compared to the 2.0 per cent rise in capital city units.
Capital city house rents were up 3.3 per cent while regional houses rose by a higher 4.0 per cent in the three months to March.
Houses and units in Darwin showed the strongest growth in rental rates over the quarter, up 8.2 per cent and 7.0 per cent respectively.
“While housing rents are rising at the fastest pace since 2007, the headline reading hides the sheer diversity of rental conditions around the country,” CoreLogic Research Director Tim Lawless said.
“At one end of the spectrum we have Perth and Darwin where annual rental growth is well into double digits and accelerating. At the other end is Melbourne and Sydney where rents are down over the year.”
According to CoreLogic, Melbourne unit rents have fallen by 8.2 per cent over the year and Sydney unit rents are 4.9 per cent lower.
“The annual decline in rents across Australia’s two largest cities is attributable to falling rents in the unit sector, where closed international borders have created a demand shock in a market that was already challenged by high supply,” Lawless said.
“Some inner city precincts of Melbourne have seen unit rents fall by more than -20 per cent over the past 12 months. Prospects for a material improvement in rental conditions across these inner city high density precincts are largely dependent on a return of tenancy demand from international students and visitors, who were previously a key component of rental demand,” he continued.
While rents have been rising in general, home prices have been rising at a faster pace causing rental yields to compress in most capital cities, according to Lawless
“The exceptions are Perth and Darwin where rents have risen at a faster pace than housing values, driving a rise in yields,” he said. “The opposite is true in Sydney and Melbourne where rental yields are plumbing new record lows.”
“Outside of Sydney and Melbourne, with mortgage rates so low, yields are generally high enough to provide investors with positive cash flow opportunities from the outset,” he concluded.
