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Investors need to strike a fine balance when it comes to long-term goals and current rental income. According to the Quarterly Rental Review by CoreLogic, those aiming to gain in the long run may be doing so by reducing their yield in the near future.
"With new housing supply increasing and investor purchasing at record highs we have seen a significant slowdown in the rate of rental growth over the past couple of years and we expect this trend to continue over the coming year," said Cameron Kusher, CoreLogic RP Data research analyst on 9 April.
The report reveals that capital city houses and units commanded a 1.2 per cent increase in rent over the first quarter of the year. However, SQM Research reveals that the capital city average asking price for a house increased by 2 per cent over the three months to 14 April.
Over the same period, units increased in value by one per cent. These figures could suggest that investors looking to capitalise on increasing home values should be looking at standalone houses, while those focusing on cashflow positive ventures should stick to the market for apartments and units.
Breakdown of capital city rental properties
The strongest contenders in the market for houses for rent were Melbourne, Canberra and Sydney, which saw 1.3 per cent, 1.1 per cent and one per cent gains respectively in rental asking prices. In fact, the only market that CoreLogic RP Data recorded as losing traction in this sector over the quarter was Darwin.
"Given the softer conditions recorded across the capital city rental market towards the end of 2014, rental growth over the first quarter of 2015 has been relatively strong at a capital city level," Mr Kusher commented.
Across the country, the average house is renting for around $400, while a unit is priced only $10 cheaper at $390, according to CoreLogic RP Data.
SQM Research figures reveal that Darwin is still the most expensive city in which to rent a unit, followed by Sydney and Perth. Houses for rent, on the other hand, are most expensive in Sydney, followed by Darwin and then Perth.
These figures reveal that it's important to not put too much stock in "average" figures. For rental prices in both the house and unit markets across the capital cities, only two cities are above the average price. These markets disproportionately affect the average, making rental prices across the country appear more expensive than they actually are.
