The lack of rental property in Australia's main cities is pushing rental prices to record levels, a new report revealed.
Australian Property Monitors (APM) reported that the cost to rent a Sydney unit increased by 5.6% in the quarter to March alone and 10.1% compared to a year ago. Cost of renting a house increased by 2.7% in the quarter and 8.6% in the year to March. The overall median price is now $380 per week for both property types.
Michael McNamara, general manager for APM, said: "The picture for renters is bleak as families continue to feel the housing squeeze. At one end higher interest rates are deterring would-be homeowners from entering the property market whilst, on the other side of the coin, increasing rents are eating into their disposable income, making it hard to save for a deposit."
Brisbane saw rents for houses increase by 4.9% in the March quarter and 14.3% in the year to March, with the median now at $320 per week. Unit rents increased 5.4% in the quarter after staying steady for the previous three quarters.
There was strong double digit growth in other cities, with Adelaide houses increasing 9.6% in the year to March, Canberra houses showing a 16.7% increase and Melbourne a 10.7% increase in the year, according to APM.
Darwin was the only city to experience a fall, with house rent prices falling 5% in the quarter to March, the asking price now averaging $380 per week.
The changes are good news for property investors, though, as gross rental yields continue to improve. The data shows that average gross yields in Sydney passed 4% during the March quarter for the first time in five years.
McNamara said the figures should encourage property investors back into the market.
"While these figures are bad news for renters, investors have something to smile about. Gross rental yields are the highest they've been throughout most Australian markets for the five years that we measured in this report. This means that returns for investors are increasing."
Rental yields on houses increased by 2.9% during the quarter in Melbourne and 7.6% in the year. There were also big improvements in Adelaide and Canberra with yields going up 5.5% and 5.7% respectively in the year to March, says the report.
The biggest increases came from the unit market where yields were up 13.5% in Adelaide through the year to March and 5.34% in the quarter alone, and average weekly rents moved to $230 per week.
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