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Tight rental markets heat up

By Michael McMahon

Posted on Thursday, January 17 2013 at 11:09 AM

Capital cities where demand for rental properties remains the strongest saw strong price growth once again in the December quarter.

At a national level, median asking rents for houses rose slightly by 0.8 per cent while units saw a modest lift of 0.2 per cent.

The biggest increase was seen in Perth, where the cost of renting a house rose 4.4 per cent to $470 per week and unit rents jumped 2.6 per cent to $400 per week.

That impressive result is mostly thanks to an influx of new arrivals in recent times, putting pressure on an already limited rental market, Australian Property Monitors senior economist Andrew Wilson says.

Asking unit rents in Sydney rose 2.2 per cent to $460 per week in the three months to year-end. House rents remained steady at $500 per week.

Wilson says underlying demand in the New South Wales capital remains strong, driven by a chronic shortage of new housing supply.

Brisbane saw a 2.6 per cent lift in house rents to $390 per week, while units experienced a 1.4 per cent gain to $375 per week.

Competition for accommodation in southeast Queensland is on the rise, with the vacancy rate in Brisbane continuing to tighten.

“The upward pressure on rents is set to continue in markets such as Perth, Brisbane and Darwin with Sydney also set to resume rental growth in 2013 for both houses and units,” Wilson says.

Melbourne’s rental market looks to have stagnated over 2012, with asking rents for both houses and units showing no movement in the December quarter.

“Melbourne will continue to provide the best value for tenants with rents to remain stable or even decline over 2013,” he says.

Gross yields for houses were up in every capital city with the exception of Sydney, Melbourne and Darwin, which recorded slight dips into negative territory.

The yield story is more positive for units, with every city experiencing growth in the quarter except Canberra and Hobart.

“Brisbane and Perth are providing investors with the best gross rental yields for houses, each with 5.27 per cent reported over the December quarter,” Wilson says. “Perth also has the highest gross rental yields for units of the major capitals at 5.77 per cent, reflecting the recent surge in rental growth.”

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