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08-10-2014, 10:15 PM
Rental growth stalls as investors buy up big
Rebecca Thistleton
479 words
9 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Asking rents have stalled in the capital cities after a spike in investment property purchases pushed up supply in the housing rental market.
In cities where home and apartment prices have risen, the slowdown in rental growth has led to yield depression in the past year.
Rental growth for houses was flat in most cities in the September quarter and fell in some areas for units, research from Domain Group showed. Year-on-year rents tended to be flat.
Property lending for investors has been at a record high. Broker firm AFG said investors made up almost half the new loans processed in NSW last month and more than 30 per cent in the other states. Foreign investment has also boosted the number of homes available to rent.
The rental market has become more affordable for tenants in Canberra and Perth as landlord returns fall. Asking rents were down 6 per cent in Perth to $395 for units and $450 for houses. In Canberra, rents have fallen to $380 a week for units and $450 for homes.
Yields for homes have dropped more than 6 per cent in both cities compared with the 2013 September quarter. Unit yields have also dropped more than 6 per cent year-on-year to 4.52 per cent.
In Melbourne, where apartment supply has continued to grow, yields remained steady at 4.55 per cent for units and fell 3.6 per cent for houses to 4.12 per cent. Melbourne's median asking rent for a home is $380 a week and $370 a week for units.
Despite a slowdown in Darwin property, the rental market is still tight and the median asking rent for a home is $660 a week – the highest in the country, followed by Sydney at $510. Sydney has been the country's strongest-performing residential property market for the past year.
Investment lending and construction has surged but rents have held steady as demand is still strong. Yields, however, have compressed because of the consistent rise in property values. In the past year, year-on-year yields for Sydney houses fell 6.9 per cent to 4.1 per cent but were steady in the past quarter.
"Although, we've seen a pause in rental growth over the September quarter, demand will continue to put upward pressure on rents in Sydney," Domain Group senior economist Andrew Wilson said .
Sydney agents have reported ongoing demand from investors for new stock. Greencliff Realty, which is marketing properties in Chippendale's Central Park development, said investors made up about 50 per cent of all buyers to date in the $2 billion project.
Three stages of the Frasers and Sekisui Hours joint venture have been sold and only 15 of the 1428 apartments released were yet to sell.
Fairfax Media Management Pty Limited
Document AFNR000020141008eaa900048
Rebecca Thistleton
479 words
9 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Asking rents have stalled in the capital cities after a spike in investment property purchases pushed up supply in the housing rental market.
In cities where home and apartment prices have risen, the slowdown in rental growth has led to yield depression in the past year.
Rental growth for houses was flat in most cities in the September quarter and fell in some areas for units, research from Domain Group showed. Year-on-year rents tended to be flat.
Property lending for investors has been at a record high. Broker firm AFG said investors made up almost half the new loans processed in NSW last month and more than 30 per cent in the other states. Foreign investment has also boosted the number of homes available to rent.
The rental market has become more affordable for tenants in Canberra and Perth as landlord returns fall. Asking rents were down 6 per cent in Perth to $395 for units and $450 for houses. In Canberra, rents have fallen to $380 a week for units and $450 for homes.
Yields for homes have dropped more than 6 per cent in both cities compared with the 2013 September quarter. Unit yields have also dropped more than 6 per cent year-on-year to 4.52 per cent.
In Melbourne, where apartment supply has continued to grow, yields remained steady at 4.55 per cent for units and fell 3.6 per cent for houses to 4.12 per cent. Melbourne's median asking rent for a home is $380 a week and $370 a week for units.
Despite a slowdown in Darwin property, the rental market is still tight and the median asking rent for a home is $660 a week – the highest in the country, followed by Sydney at $510. Sydney has been the country's strongest-performing residential property market for the past year.
Investment lending and construction has surged but rents have held steady as demand is still strong. Yields, however, have compressed because of the consistent rise in property values. In the past year, year-on-year yields for Sydney houses fell 6.9 per cent to 4.1 per cent but were steady in the past quarter.
"Although, we've seen a pause in rental growth over the September quarter, demand will continue to put upward pressure on rents in Sydney," Domain Group senior economist Andrew Wilson said .
Sydney agents have reported ongoing demand from investors for new stock. Greencliff Realty, which is marketing properties in Chippendale's Central Park development, said investors made up about 50 per cent of all buyers to date in the $2 billion project.
Three stages of the Frasers and Sekisui Hours joint venture have been sold and only 15 of the 1428 apartments released were yet to sell.
Fairfax Media Management Pty Limited
Document AFNR000020141008eaa900048