Units yielding bigger returns than houses for investors
House rent increases have lagged increases for apartment over the past five years, according to the latest RP Data rental report.
Capital city rents increased at an average annual rate of 7% for houses and 7.9% for units over the past five years.
But since 2009, capital city house rents have increased by just 4.1% while units have performed relatively stronger with rents increasing by 8.6%.
Across the nation, house rents have increased by just 4.3% since the beginning of 2009, while unit rents are up by 7.6 %.
Mr Kusher said the result is an indication that rental demand for units has been much stronger than for houses.
“The result reflects changing lifestyle patterns and the ongoing densification of inner-city areas and subsequent increasing demand for rental units in these regions,” he said.
For units, rents are most expensive in Sydney ($450/week) and Canberra ($430/week). Hobart is home to the most affordable rental units ($280/week), followed by Adelaide ($290/week) and Melbourne ($350/week).
Despite a quarterly slow-down in rental growth, the lack of first home buyers and limited supply of new housing may be creating increased competition, Mr Kusher said.
“This activity may be beneficial to investors who could see a boost in rental rates as vacancies tighten and fewer new dwellings continue to commence construction.”
Pilbara in the WA has the most expensive rents of all rental markets, at $1,650 a week for houses, according to RP Data.
Darwin has highest median rents followed by Canberra and Sydney. The cheapest capital cities to rent are Adelaide and Hobart.
Weekly rental rates increased nationally by 2.9% over the past year – slightly higher than the 2.7% increase in the capital cities.
The national median rental rate is currently $360 a week with the combined capital city median at $380.
According to the results, rental growth has tracked below average over the past 12 months; a trend which has been evident since early 2008 when rental demand started to slow.
“Combined capital cities rents increased by 2.7% over the year, which is below the inflationary figures to March 2011,” Mr Kusher said.
