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Changes to rental yields highlight shifting capital city market

On Jul 23 2014
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  • News


The latest Australian Property Monitors (APM) Rental report  notes the movements of capital ...

The latest Australian Property Monitors (APM) Rental report  notes the movements of capital city rental rates during the June quarter, which could be invaluable for any potential investors considering purchasing residential property in the coming months. There were some interesting movements across the market, with Sydney and Melbourne posting changes in both home and unit rates. 

For example, Sydney saw a 2 per cent increase in home rental rates over the last quarter, with units undergoing the same increase. On the other hand, Melbourne saw unit rents increase by 1.4 per cent over the quarter, which could be great news for those interested in purchasing apartments in central city developments. However, Melbourne saw house prices over the last 12 months increase by 5.6 per cent - the largest annual growth of any capital city rental rate at the end of June. 

Units seem to be undergoing higher levels of growth nationwide, highlighted by APM Senior Economist Dr Andrew Wilson.

"Overall, around the country, rental growth for units continues to outperform houses in most capitals reflecting affordability barriers and lifestyle choices. Capital city rental yield results varied over the June quarter." 

But overall, Dr Wilson said rental yields for both houses and units are beginning to slow down in their growth as prices increase across the nation. With the rental market beginning to fall off, it could be worth investigating the options available to those looking into selling a house in the near future. 

This was highlighted in an RP Data report released at the beginning of the month, which stated Australia's capital city dwellings saw values increase by 10.1 per cent over the last 12 months. This growth has been encouraged by the low interest rate and rising home loan approval rates, giving more people the opportunity to secure their own slice of real estate. 

Furthermore, some states recently changed their First Home Owner Grant (FHOG) rules in order to try recapture this market. Many states now don't offer the FHOG for established properties, encouraging people to purchase new or construct their own homes. 

After all, as yields remain steady or begin to decline in the face of increasing buyer demand, cutting ties and securing capital gains could be the best move to make. Get in touch with a real estate agent in your local area to begin discussing the various options available to you and gain insight into your situation. 

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