Rents still on the rise

Recent data reveals rental growth will continue to be strong throughout the year.

According to Cameron Kusher, senior research analyst with property pricing specialist RP Data, while median values fell in many areas across Australia during 2009, one strong aspect of the property market has been the exceptional growth in weekly rental rates across houses and units.

Darwin was the standout performer in terms of rental growth during 2008 and, surprisingly, it was also the best performer in terms of property-value growth over that period. Weekly rents for Darwin houses climbed by 18 percent or $70 per week, while unit rents rose by 19 percent or $60 per week.

"Although Darwin's property values recorded the greatest increase through 2009," Kusher said, "it is interesting to note that Darwin maintains the country's best rental yields at 6.25 percent for houses and 6.44 percent for units."

Sydney followed with an increase of 18 percent or $70 per week over the year while unit rents climbed by 14 percent or $50. Following close behind Sydney was Melbourne where rental rates for houses increased by 17 percent or $50 per week, and units increased by 14 percent or $40 per week.

Adelaide and Canberra were the two cities that underperformed. Adelaide house rents climbed by just 5 percent or $15 per week during 2008, and unit rents increased by 4 percent or $10 per week. Canberra's median weekly rental for houses increased by 4 percent or $15 per week and units by 6 percent or $20 per week.

Along with Darwin, Adelaide was the only other capital city market to record positive value growth during 2008.

"As this growth is likely to slow during 2009, we would anticipate further rental growth for Adelaide during the year," Kusher said.

Throughout Australia's local government areas (LGA's) some regions performed particularly strongly during 2008 in terms of rental growth.

Outside of the mining and resource areas it has been the more affluent areas of inner-Sydney and inner-Perth that have witnessed strong increases in weekly rental rates. This has occurred despite the fact that many of these areas have recorded value falls and have been hampered by a slow rate of sales coupled with significant increases in property listings during the latter part of 2008.

The results show that quality inner-city property will continue to witness strong long-term demand for both owner occupation and rental occupation.

Across the unit markets, the list is almost exclusively populated by inner-city areas and high quality waterfront precincts close to the CBD. The two exceptions are Kalgoorlie-Boulder (a mining area in WA that has seen strong housing demand result in a significant increase in weekly rents) and Bassendean, located to the east of the Perth CBD.

The other interesting point to note is that the list is dominated by suburbs within Sydney and Perth.

Based on his research, Kusher anticipates rental growth throughout 2009 to continue to be strong, although it may not be as strong as that witnessed during the past 12 months.

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