Nila Sweeney

Rental values surged to double-digit growth over the past 12 months, thanks to worsening affordability and dwindling supply, a new report has shown.

Australian Property Monitors found that rents rose the most in cities where affordability is worst, such as Sydney and Perth.

Investors in Sydney saw rents for houses and units soaring by 15% and 11% over the last 12 months. Property investors in Perth are reaping the benefits of increased demand for rentals, with rents jumping by 17% for houses, while unit rental values have soared by 25% to $350 per week.

"It's obvious rising rents are being driven by high mortgage rates," said Michael McNamara, general manager, Australian Property Monitors. "On one hand landlords are trying to offset increased costs and on the other hand high interest rates deter renters from making the shift into home ownership."

McNamara noted that the combination of Generation Y leaving home, strong migration patterns and a weak building sector is intensifying demand. "The shortage of affordable accommodation will no doubt add to the growing number of displaced renters who can't afford to live in well-located areas," he said. "This latest rental report provides clear evidence that disaffected would-be homeowners are driving up rental values in the most unaffordable capitals."

Median weekly asking rents: houses

City Mar 08 June
08
June
07
3-month change 12-month change Gross rental yield
June 08
Sydney $420 $390 $365  8% 15% 4.3%
Melbourne $350 $350 $300 0% 17% 3.9%
Brisbane $350 $330 $310 6% 13% 4.4%
Adelaide $290 $285 $275 2% 5% 4.3%
Canberra $410 $410 $390 0% 5% 4.7%
Perth $350      $330 $300 6%  17% 3.9%
Darwin $450  $420  $390   7%  15% 5.3%
Hobart $285   $280  $270  2%  6% 4.9%

 

Median weekly asking rents: units

City Mar 08 June 08 June 07 3-month change 12-month change Gross rental yield June 08
Sydney $400  $385  $360    4% 11% 5.1%
Melbourne $310  $300  $275  3% 13% 4.6%
Brisbane $300      $300 $290 0% 3% 4.7%
Adelaide $240  $240  $220    0% 9% 4.7%
Canberra $385  $390  $350    -1% 10% 5.7%
Perth $350  $320  $280    9% 25% 4.5%
Darwin $350  $350  $320    0% 9% 6.1%
Hobart $235  $243  $220    -3% 7% 4.7%

Source: www.homepriceguide.com.au

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan