Annual rental growth has hit a record low, as rental rates across the combined capital cities increased by 0.1% in May.
According to the CoreLogic RP Data monthly rental review,
the greatest annual increase in weekly rents is occurring in Sydney and Hobart, which indicates a disconnect between demand and supply.
“Sydney stands out as seeing strong population growth which is creating more demand for accommodation in the city,” research analyst and report author, Cameron Kusher said.
Kusher said that although Sydney and Melbourne recorded low rental yields, investors in these two cities are not targeting rental returns.
“It appears to be purely a capital growth play and likely to remain this way, at least for the time being,” he said.
The slow rental appreciation is likely due to the ongoing boom in dwelling construction across Australia’s capital cities, says Kusher, along with record high participation in the housing market from investors.
Combined capital city rental rates were recorded at $488 per week and have risen by 0.6% over the past three months and by 1.5% over the past 12 months.
Rents fell over the past three months in Perth and Darwin; along with Canberra these cities have recorded rental falls over the year, down -4.5%, -5.5% and -0.6% respectively.