Sydney’s rental market strong

Low-interest-rates-are-bolstering-the-housing-market-_157_6006289_0_14101765_300With the Reserve Bank of Australia’s latest cash rate cut still fresh in the minds of investors, new research from CoreLogic RP Data is likely to provide further incentive to purchase property in Sydney. In its April Rental Review, CoreLogic analysis found that while rental growth is moderating across the country, homes in the Harbour City have posted some of the strongest results.

Analyst Cameron Kusher pointed out that rental growth across the country has lagged somewhat in recent months, ticking over at its slowest rate in the last decade once more in April. Perth, Darwin and Canberra each saw significant falls in the price of rent, with 4.2 per cent, 4.7 per cent and 2.6 per cent declines respectively.

However, the property market in Sydney has shown its strength once more. Not only are house prices flying high, but rents are also expanding faster than the average rate. According to CoreLogic figures, rent prices have appreciated 3.3 per cent over the past year in the New South Wales capital, putting the city just ahead of another strong rental player – Hobart, on 3.2 per cent growth.

Interestingly, Mr Kusher also noted that there has not been much difference between houses and units in terms of increasing rents across the country. While rents for detached homes rose 0.1 per cent over the month, units dropped by 0.1 per cent – though this has been slightly different between locations. According to figures from SQM Research, house rents in Sydney have appreciated 3.6 per cent over the past year, while units have only gone up 1.1 per cent to the week ending May 12.

Mr Kusher said rental growth in the unit market could continue to lag as a high numbers of new stock come into the market.

“The slower pace of rental growth may be attributed to a number of factors including: a ramp-up in investment purchases resulting in an increase in rental stock, an increase in housing supply which has also added to rental stock and a reduction in net overseas migration decreasing demand for rental stock,” he said in a May 18 release.

This has been an ongoing trend, with the Housing Industry Association reporting a 5.3 per cent increase in the volume of approvals for multi-unit dwellings across the country in March.

This is something to keep in the back of your mind when investing in residential property. Rents are an important part of any investor’s strategy, but with growth tracking more moderately, it could be worth approaching your property with a longer-term state of mind.

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