Rental growth may be easing but it remains well above average. Leading property data, information, analytics and services provider, CoreLogic, released figures that may be of interest to investors at the start of July:
- CoreLogic’s national rental index rose 0.4% in June, the lowest rise since September last year; and the annual rise of 8.2% was the lowest since last November.
The slowdown in rental growth is most evident in the Sydney, Melbourne and Brisbane unit sectors, with net overseas migration returning to more normal levels and students not impacting on rental demand quite as much mid-year cited as factors.
- Unit rents are up 22% over the past two years nationally compared with a 16% rise in house rents over the same period.
Affordability might be another factor contributing to slower rental growth in the unit market.
- The median income household would use 32.2% of its gross annual income on rental payments, according to affordability metrics to March this year, the highest portion on record.
Rents are still rising at an above average pace across most regions and housing types, despite the slowdown in rental growth across some markets.
- Gross rental yields have stabilised, having held at around 3.5% across the capitals since early 2023. Regional yields are holding at around 4.4%.
CoreLogic says the median dwelling value in Australia saw a $59,000 increase in June and is now $794,000. Demand for housing remains strong despite the downsides including high rates, cost of living pressures, affordability challenges and tight credit policy. Tight supply levels are keeping upwards pressure on values. The Domain Rent Report released at the start of July had rental price slowing, vacancy rates lifting and signs of more investors coming back into the market. While this is a bit of positive news for tenants, it’s a long way off being a shift to a renter’s market.
Back in March 2022 when the RBA began upping the interest rates through the end of last year, there were increasing headlines and forecast that may have troubled investors. But, by and large, taking different market cycles into account, the property investors are a resilient lot! No one has a crystal ball. Investors should hold true to their goals, understand what makes a good investment, stay within budget, and check their yields targets. Knowledge is the key. Look to expert opinions from reliable sources and solid data and filter out the rest.