Property values slump but rents rise

Sydney and Canberra were the most resilient in the month of October, with homes producing flat to positive capital growth at 0 per cent and 1.6 per cent respectively.

The best performing capital city was Darwin, with home values up 2.4 per cent over the three months to October, while Brisbane experienced the weakest results with values down -2.8 per cent.

The year-to-date results highlight the divergent outcomes more clearly, RP Data’s director of research Tim Lawless said.

“Over the 10 months to October, Canberra and Sydney dwelling values have not moved a great deal, up 0.9 per cent and down 1.4 per cent respectively,” Mr Lawless said.

“In contrast, Brisbane home values have been hit hard and are now off -7.5 per cent while in Melbourne dwellings have corrected -5.8 per cent after a very strong 25-30 per cent capital growth over 2009-10.”

“The combination of lower interest rates, cheaper homes, and rising incomes is generating a welcome boost to housing affordability, particularly in those markets where value falls have been more significant.”

However despite falls in home values rental growth has been positive according to Rismark’s managing director Ben Skilbeck.

“While home owners and property investors have endured a 2.8 per cent tapering in actual home values over the course of 2011, rental growth has been very solid,” Mr Skilbeck said.

“According to ABS, the dollar value of rents has been rising at a 4 to 5 per cent pace over 2011,” he said.

Darwin experienced the highest gross rental yields of 5.3 per cent for houses and 5.8 per cent for units, while Melbourne was the lowest with 3.7 per cent for houses and 4.3 per cent for units.