Rental yields pushed to record lows

Yields for capital city dwellings have reached a record low, with Australia’s largest cities dipping below the national average.

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A new report from CoreLogic RP Data has noted that dwelling rents are broadly flat at a time when values continue to rise, which is pushing rental yields lower.

Canberra was the only capital city to record an improvement in rental yields, as houses rose from 4.1 per cent in April 2015 to 4.2 per cent in April 2016, while units remained unchanged at 5.0 per cent.

In Hobart, houses and units both remained steady at 5.3 per cent over the same period.

Adelaide’s houses dropped from 4.2 per cent to 4.0 per cent and units declined from 4.8 per cent to 4.6 per cent.


In Brisbane, houses fell from 4.5 per cent to 4.2 per cent while units dropped from 5.4 per cent to 5.3 per cent.

Sydney’s houses dropped from 3.4 per cent to 3.1 per cent while units fell from 4.3 per cent to 4.0 per cent.

In Melbourne, houses declined from 3.2 per cent to 2.9 per cent and units fell from 4.2 per cent to 4.0 per cent.

Perth’s houses declined from 4.0 per cent to 3.7 per cent while units fell from 4.8 per cent to 4.3 per cent.

In Darwin, houses fell from 5.7 per cent to 5.2 per cent and units dropped from 5.9 per cent to 5.0 per cent.

Across the nation’s capital cities, houses fell from 3.6 per cent to 3.3 per cent and units dropped from 4.5 per cent to 4.2 per cent.

CoreLogic RP Data research director Tim Lawless said, “The low yield profile across Australia’s two largest cities, which are also the cities that attract the largest investment demand, suggests that most recent investors, despite the low mortgage rate settings, are likely to be utilising a negative gearing strategy to offset their cash flow losses against their taxable income.”

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