Property investors enjoying rising rents and yields

Australia is currently a landlord’s market, with rental conditions favouring investors over tenants in many parts of the country.

That’s explained by the very low vacancy rate (i.e. the share of vacant properties), which fell from 1.5% to 1.2% between May 2022 and May 2023, according to CoreLogic.

Investors in much of Australia are enjoying strong demand for their properties; conversely, tenants are being forced to compete hard. As a result, rents are continuing to rise.

Here are five key takeaways from CoreLogic’s May rental data:

 

  1. Rental growth has slowed

Rents are growing strongly, but the pace has slowed. The nation's median rent increased by 0.8% in May, compared to 0.9% in April and 1.0% in March. As a result, rents rose by 'only' 9.9% over the year to May – a significant increase, but the first time in 10 months it had been less than 10%.

 

  1. Most markets are growing

Over the year to May, 93.3% of house and unit markets recorded a rental increase, while 6.7% recorded a decline. Most of those falling markets were in Canberra and regional Australia.

 

  1. Units are growing faster than houses

Unit rents recorded much stronger annual growth (14.8%) than house rents (8.1%). That reduced the gap between the median weekly unit rent ($558) and house rent ($594) to only $36.

 

  1. Metro locations are growing faster than regional

Capital city rents recorded much stronger annual growth (11.7%) than regional rents (5.4%).

 

  1. Yields are rising

Yields rose from 3.28% to 3.88% over the year to May. Units recorded higher yields than houses (4.64% v 3.64%) and stronger annual growth (0.82 v 0.52 percentage points).

 

Want to become a property investor?

Property investment can be a great way to build long-term wealth – especially when rents and yields are rising.

Get in touch if you’d like to buy an investment property. I’ll research your borrowing capacity, provide you with different loan options and model different repayment scenarios. If you decide to proceed, I’ll manage the loan application process from beginning to end.


Published: 26/6/2023