The rental market is the gift that keeps on giving for property investors across Australia. The December quarter saw rents increase for capital cities, regional areas, and houses. This was driven by the largest annual growth rate since 2007 with a 9% hike over the last 12 months.
A recent report from CoreLogic shows that while quarterly growth rates have eased recently after peaking at 3.2%, there is still plenty of competition for rental properties in the Australian market which is continuing to push rental prices and yields up for investors.
Regional rents continue to outpace capital city rental prices with regional dwelling rental prices increasing 2.5% which is in comparison to the capital city growth of 1.6%, taking annual growth rates up over 12%. Over ten years these figures for regional markets look quite impressive with a whopping 33% increase in regional rental prices versus 24.9% for capital city markets.
There continues to be a supply hangover from the incredible owner occupier activity that dominated the market for the best part of 2020 and 2021. Meaning that stock which would traditionally be put into the rental market was absorbed by the wave of owner occupiers leading to the lack of rental properties in the market currently.
In addition to this, the number of investors as a proportion to total mortgage demand moved through record lows in early 2021, highlighting relatively low levels of investment activity across the country partly due to the pandemic uncertainty.
The most expensive capital city rental markets were in Canberra at $651 per week average rent followed by Sydney and Darwin.
Brisbane was the strongest performing market over this quarter with an annual growth rate of 2%, while Darwin saw only 0.6%.
Whilst rental prices are increasing for the most part across Australia, the overall yields are declining. Even with the record-breaking rental increases being achieved, property sale prices are still outpacing rental growth resulting in a decline in the average gross rental yield. Adding more weight to the argument of purchasing in more affordable markets such as Queensland in 2022.