New data has confirmed the emergence of a high-growth, low-yield trend in Australia's two biggest property markets.
The frenzied investor market in Sydney and Melbourne is coinciding with record-low gross rental yields, fresh figures have revealed.
In Sydney, houses fell from 3.6 per cent to 3.1 per cent during the 12 months to August, while units fell from 4.5 per cent to 4.1 per cent, according to CoreLogic RP Data.
Houses in Melbourne decreased from 3.2 per cent to 3 per cent and units dropped from 4.2 per cent to 4.1 per cent.
Houses declined from 4.5 per cent to 4.4 per cent in Brisbane, while units remained steady at 5.4 per cent.
Houses in Adelaide dropped from 4.2 per cent to 4.1 per cent and units fell from 4.8 per cent to 4.7 per cent.
In Perth, houses fell from 4.1 per cent to 3.9 per cent, while units dropped from 4.6 per cent to 4.5 per cent.
Houses in Hobart remained unchanged at 5.2 per cent and units rose from 5.2 per cent to 5.5 per cent.
In Darwin, houses fell from 5.9 per cent to 5.5 per cent and units were down from 5.8 per cent to 5.5 per cent.
Houses in Canberra remained steady at 4.1 per cent and units fell from 5 per cent to 4.9 per cent.
The combined capital city yields for houses fell from 3.7 per cent to 3.4 per cent, while units dropped from 4.5 per cent to 4.3 per cent.
CoreLogic RP Data head of research for Tim Lawless said these low yields have been largely overlooked by investors who appear to be more focused on future capital gains than current cash flow.
“While the rate of capital gains slowed last month, today’s results are only one month worth of data,” he said.
“Therefore, we should be cautious about interpreting this as a slowdown in the overall trend of value growth. In fact, the quarterly and annual trend of capital gain remains high in Sydney and Melbourne.”
Mr Lawless said the spring selling season will provide a timely litmus test given it’s a time when listing numbers normally experience a significant increase.
“It will be important to monitor whether buyer demand keeps pace with the additional number of homes being advertised for sale,” he said.