Rental growth outpacing home price growth

A CoreLogic Rental Report for the quarter ending December 2017 has revealed that national rental rates grew by 0.3 per cent, an increase from the 0.1 per cent growth rate on the same quarter in 2016, and an overall growth of 2.7 per cent in the 2017 calendar year.

Combined capital city rental growth remained stable, while the regional market experienced a spike of 1.2 per cent.

Capital cities that recorded growth in the December quarter were Melbourne (0.3 per cent), Adelaide (0.9 per cent), Hobart (2.1 per cent) and Canberra (1.6 per cent).

Conversely, rental rates dropped in Sydney (-0.3 per cent), Brisbane (-0.1 per cent), Perth (-0.7 per cent) and Darwin (-0.5 per cent).

The CoreLogic report noted that median weekly rents now sit at $420 for houses and $425 for units.

“Overall, the rental data indicates to us that although rental growth has accelerated over the past 12 months, the quarterly data is pointing to softer growth,” CoreLogic analyst Cameron Kusher said.

“Typically, the first quarter of each year shows strong positive seasonality, so it will be interesting to see how growth over the first quarter of 2018 compares to the first quarter of 2017.

“As the latest result show, the final quarter of 2017 was relatively weaker for rental growth compared to the previous year.”

Mr Kusher has predicted “moderate growth in gross rental yields” if rental growth continues to outpace home price growth.

“With rental growth outpacing dwelling value growth, there may be some moderate improvement in gross rental yields over the coming 12 months,” the analyst concluded.

[Related: Drop in house prices was seasonal: ANZ]