Overall rental prices in Australian capital cities were unchanged in May but rates fell everywhere apart from Melbourne and Hobart, the latest index shows.
Weekly rents were unchanged but year on year they were down 0.3% taking the average rate to $489 a week for houses and $469 a week for units, according to the data from the CoreLogic Rent Review report.
The firm’s research analyst Cameron Kusher expects that the weakness in the rental market will persist and on an annual basis rents will fall further over the coming months.
The data also shows that over the 12 months to May several capital cities saw a rise in rents. In Sydney they increased by 0.9%, in Melbourne by 2.3%, in Hobart by 3.7% and in Canberra by 0.1%.
But falling rents pulled the combined capital average lower with a drop in Perth of 8.8%, a fall of 16.9% in Darwin, and down 0.9% in Brisbane and Adelaide 0.9% year on year.
‘Since we started tracking annual rent changes back in 1996, the May 2016 results represent the lowest annual change on record. The rental market slowdown has been rapid over the past year with rents increasing by 1.5%,’ said Kusher.
‘A number of factors such as the softest wages growth on record have contributed to this slow down. At the same time, we also saw unit construction hit record high levels and a lack of population growth which has contributed to a lesser demand for rentals,’ he explained.
He pointed out that with rental rates easing over the year and home values continuing to rise rental yields continue to sit at record lows of 3.3% for houses and 4.2% for units.
However, gross rental yields for houses are now at record lows in Sydney, Melbourne and Canberra while unit yields are at historic lows in Sydney.
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