House rents pushing closer to apartment rents: CoreLogic RP Data

National house rents are 2.6% higher at $400 per week, while unit rents are 1.3% higher over the year, currently sitting at $390 per week.

CoreLogic RP Data has noted across the combined capital cities, rental growth has been more moderate, with house and unit rents up 1.2% to $435 per week and $415 per week respectively. 

Rental growth has picked up following the weakness at the end of last year, but Perth and Darwin had rents fall over the March 2015 quarter.

Darwin, which also happens to be the most expensive capital city unit market, saw rents down 5.5%, a $10 decrease to a weekly rate of $630.

Melbourne (2.8%) and Canberra (2.6%) were the strongest performers for the March 2015 quarter. 

CoreLogic RP Data research analyst Cameron Kusher said rental growth over the first quarter of 2015 that Melbourne’s rental market for houses led the recovery, up 1.3% to $390, followed by Canberra, up 1.1% to $480, and Sydney, up 1.0% to $53

The apartment market also record slight gains ip 1.3% in the first quarter to $390 nationally.

The rents for units in major capital cities are now pushing closer to the rent for houses, with Sydney apartment rents at $500, Melbourne at $370 and Brisbane at $390.

Kusher anticipates the long term trend, of slowing rental growth, would re-emerge.

“With new housing supply increasing and investor purchasing at record highs, we have seen a significant slowdown in the rate of rental growth over the past couple of years and we expect this trend to continue over the coming year,” Kusher said.

As rental growth slows, and house and apartment prices continue to rise, investment yields are being squeezed.

In the March quarter alone, Sydney’s dwelling value climbed by 5.8%, Melbourne by 3.5% and Canberra by 4.1%, well ahead of the rental growth rate of around 1% for houses. On the other hand, in the Perth market, the rent for houses stayed flat in the March quarter, ahead of 2.7% negative growth in dwelling values.’