Demand is increasing for apartment space in Australia, particularly in Sydney where living in a house is usually more expensive. The demand is driving up prices, however, and now median asking prices for rents have risen 4.7% for the quarter to $470 a week. That’s just a shade under the $500 per-week cost of house rental in the city. Prices are also rising in Perth, while Melbourne continues to offer the best deals in terms of price and vacancy, thanks in part to a high number of new apartments becoming available. Other large cities around the continent like Adelaide and Canberra maintained more or less stable apartment prices. For more on this continue reading the following article from Property Wire.
Median asking rents for houses in Australia increased nationally by 0.7% while apartment rents went up by 2.5% in the there months ending in June, the latest Australian Property Monitors report shows.
In Sydney over the June quarter rents for units have surged as demand continues to increase for apartment style living over the typically more expensive housing option. The median weekly asking rental for Sydney units rose by 4.4% over the quarter to $470.
Unit rents in Sydney are now approaching those for houses, currently at $500 a week after a flat quarter and largely flat over the previous year.
‘Increasing demand by tenants for Sydney apartments reflects growing interest for this type of accommodation that typically is located closer to the CBD and provides more established urban infrastructure. Sydney’s rental market remains highly competitive for prospective tenants with low vacancy rates being recorded in most areas,’ said Andrew Wilson, senior economist at APM.
By contrast rental growth in Melbourne and Brisbane has remained flat over the June quarter, with Brisbane unit rents falling by 1.4%. Brisbane’s current median weekly asking rents at $380 for houses and $360 for units are higher than those in Melbourne at $360 for houses and $350 for units.
‘Melbourne remains the most tenant friendly market of all the mainland capitals with rental growth for both houses and units having been subdued for some time. With comparatively high vacancy rates in most areas and a raft of new apartments in the pipeline this is expected to continue,’ explained Wilson.
In Perth, median weekly asking rentals have risen markedly over the June quarter with house rents up by 7.5% to $430 and unit rents up by 8.6% to $380. Wilson said that these rises will likely continue with Western Australia’s population set to grow by over 3% in 2012 placing upward price pressure on a Perth rental market already characterised by a shortage of accommodation.
Other capital city markets have largely recorded benign results over the June quarter although Adelaide house rents rose by 1.2% to $340, while Canberra unit rents rose by 2.3% to $440. Canberra continues to track Sydney’s rental growth indicating a tight rental market with similar high rents.
Although Darwin recorded significant rental growth for both units and houses over the June quarter, much of this can be attributed to seasonal effects that are characterised by extreme quarterly fluctuations typical of this market, Wilson pointed out.
Similar to the varied movements in capital city rentals over the quarter, investment yield outcomes have been mixed. Melbourne continues to produce the lowest yields for both houses and units of all the capitals at 4.2% for houses and 4.6% for units.
‘The strong capital growth prospects for Sydney, Perth and to a lesser degree Brisbane will act to dampen gross yield increases despite rent rises. This will nonetheless prove increasingly attractive to investors seeking capital gains as recoveries in the price cycles become increasingly evident,’ added Wilson.
This article was republished with permission from Property Wire.