Units in Sydney show strength

106Owners of units in Sydney are hitting the money when it comes to pulling in weekly rents, according to the Rental Report: March Quarter 2014, released this month by the Australian Property Monitors (APM).

However, when it comes to rental yields, the stronger result was the quarter-on-quarter figure for the New South Wales capital city.

Sydney still pricey

“Sydney maintains its mantle as the the most expensive major┬ácapital for tenants with median weekly asking house rent over the┬áMarch quarter at $500 and units at $490,” announced APM Senior Economist Andrew Wilson.

Some “underlying affordability barriers” have hindered rental growth in the housing market, explained Dr Wilson.

However, rental prices for units across the city continue to soar. Units are often seen as having advantages over houses when it comes to affordability.

The rising rental costs for units also highlights the growing demand for this kind of high-density, inner city living that has become trendy in Sydney. A March 14 release from Urban Taskforce Australia emphasised the value of “urban activation precincts” across the city, from Epping to Lidcombe.

Steady quarter-on-quarter growth

Existing landlords of units in Sydney may find themselves in a comfortable position, with gross rental yields increasing 0.5 per cent quarter-on-quarter between 2013’s December quarter and this year’s March quarter.

However, gross yields for this dwelling type have dropped by 4.2 per cent year-on-year to the March quarter in Sydney. This could reflect a softening of the market, which has been tipped by various commentators.

Even so, the drop does not stand out from Australia’s other capital cities: only three other capitals saw increases year-on-year (Darwin, Hobart and Melbourne), while the rest saw decreases.

The lowest decrease was 6.9 per cent, showing that Sydney is certainly not a loss leader when it comes to rental yields for units.

Meanwhile, gross rental yields for houses in the capital increased 1.1 per cent quarter-on-quarter to March, ahead of Melbourne, Brisbane, Perth and Canberra.

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