The outlook for residential property investors is likely to improve over the rest of 2011 after new RP Data statistics showed national rents rose 1.4% in the March quarter to a median rent of $355.
While national rents have risen just 1.4% in the last 12 months, and rents in capital cities are up 2.7% in the last 12 months, RP Data analyst Cameron Kusher expects growth to increase over the remainder of 2011, with returns in excess of inflation in capital cities.
“Capital city vacancy rates remain tight, first home buyers remain relatively inactive, interest rates are at higher levels and new supply coming online has eased markedly in recent months,” he says.
“Limited new development during 2011 is likely to add to the upwards pressure on capital city rental rates and as a result we expect capital city rental growth to revert to around five year average levels with inner city units and outer more affordable housing stock having the strongest prospects for rental growth.”
However, the prospects for rising regional rents are not as strong. Kusher says tourism markets remain weak and apart from the mining industry, economic drivers are limited.
Darwin remains the most expensive place to rent a house in Australia, with a median weekly rent of $520 and a median weekly rent for units of $430.
Canberra produced the strongest growth in the quarter, with rents for houses rising 2% to $500. Brisbane posted the strongest growth in rents for units, with the median up 2.9% to $360.
House rents were flat in Sydney and Melbourne, but grew in every other capital city.
Unit rents were flat in Melbourne and Darwin, but climbed in Perth (up 2.8%), Adelaide (up 1.8%), Sydney (up 1.2%) and Canberra (up 1.2%).
Hobart was the only capital to post a fall in rents for houses or units – the median price for unit rents there fell 1.8% to $280.
Outside the capital cities, the Pilbara region remains the most expensive place to rent a house in Australia, with rents climbing 8.2% during the quarter to a staggering $1,650 a week.
However, with a few notable exceptions – including the mid-north coast of NSW, the Illawarra region and the Gippsland area in Victoria – rental growth remains soft.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
