Rent price growth across Australia was surprisingly weak in the three months to 30 June, but property experts say investors are still ready to enter the market.
The figures from Australian Property Monitors shows that Canberra and the Sunshine Coast were the only property markets to experience movement in asking rents for houses during the quarter, with Canberra growing at 1.2% to a median of $415 per week, and the Sunshine Coast dropping by 1.3% to $390.
Rents were steady in all other capital cities.
But there was some good news on an annual basis, with Darwin rents for houses growing 11% growth from $450 to $500 during 2008-09, with Sydney house rents up 7.1% to $450.
Quarterly growth in median weekly asking rents was slightly stronger, with Darwin recording a 7.5% rise to $430, followed by Melbourne growing by 1.6% to $325 and Sydney growing 1.2% to $415.
APM economist Matthew Bell says the results are surprisingly disappointing.
“I think this result is surprising, especially that it’s across all cities. I think we flagged in March that rental prices would weaken but I didn’t expect them to be so flat.”
“I think the most surprising figure to most people would be that there are still rental rises going on in Darwin, but still, the 0% growth figure in capital cities, you’d almost always expect some statistical growth.”
But despite growth remaining flat over the quarter, Bell says there is still room for investors to enter the market when the first home owner’s grant boosts start to disappear from September, as yields still remain high.
Gross rental yields for houses grew in all capital cities, with Adelaide recording the highest quarterly gain of 3%, followed by Darwin and Canberra at 0.8% and Hobart at 0.7%.
Darwin experienced the highest yearly growth for housing yields at 8.8%, followed by Hobart at 8.1% and Melbourne at 4.3%.
For units, Perth experienced the highest quarterly growth for yields at 2.6%, while Darwin recorded the highest yearly growth at 11.7%.
“If you look at the yield figures, they are still decent,” Bell says. “I think it may give investors pause, but keep in mind there are still very low vacancy rates and strong population growth, and there hasn’t been strong construction for a while. In the medium- to long-term, rents will increase and as the economy improves investors will start moving in.”
“In the long-term, if unemployment doesn’t reach as high a point as expected, I think the market will still prove good for investors.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
