A comparison of capital city property price growth and rental price growth has confirmed that rents are delivering investors the best returns.
Over the five years to February 2011 capital city rents grew faster than property values, RP Data reported today.
“The debate over affordability in the past five years has intensified however what is often missed is the fact that over this time capital city rental rates increased at a greater average annual rate than capital city property values,” RP Data senior research analyst Cameron Kusher said.
During the five year period capital city house and unit values increased at average annual rates of 6.2 and 6.7 per cent while rents grew at an average annual rate of 6.8 per cent for houses and 7.5 per cent for units.
Darwin was the star performer with rents increasing at an average annual rate of 10 per cent for both houses and units.
Rental growth was also strong in Perth with house and unit rents rising at average annual rates of 8.7 and 8.4 per cent respectively.
Mr Kusher said investors could expect strong rental growth to continue.
“With investors and first home buyers reluctant to spend at the moment, couple with housing affordability stretched because of recent value growth and a weaker period of interest rates and construction for the remainder of 2011, we anticipate that this will put upwards pressure on rents,” he said.