With the sales market recording an overall positive first quarter, the rental market has failed to reflect the results, according to the latest figures from RP Data.
The Quarterly Rental Review from RP Data research analysts Tim Lawless and Cameron Kusher, confirms that rental markets across Australia remained relatively ‘flat’, with little to zero growth to report in some areas over the first quarter of 2014.
Across the capital cities, rental rates remained unchanged over the first quarter of 2014, at $430 a week for houses and $410 a week for units.
Despite this, Mr Kusher said that some cities continue to record annual rental growth, albeit at a much more subdued level than the five-year average.
“With home value growth comparatively strong we are seeing a deterioration of rental yields in most capital cities,” he said.
The strongest performing capital city market in the 12 months to March 2014 was Melbourne for houses, up 2.7 per cent, and Darwin for units, up 5.8 per cent.
“We expect that rental growth is likely to continue at moderate levels over the coming year, due largely to the climbing demand for housing that is highlighted by escalating sales transactions nationally,” said Mr Kusher.
Canberra received the brunt of the downward pressure, ranking last in terms of growth for both houses (down 5.8 per cent) and units (down 4.7 per cent).
On a year-on-year basis, rental rates increased by 1.3 per cent for houses and 2.6 per cent for units. Mr Kusher said that by comparison, the average annual growth over the past five years is somewhat lacklustre.
According to recent vacancy rate data sourced from the Real Estate Institute of Australia (REIA), vacancy rates across many of the capital city markets increased over the December quarter.
Sydney continued to have the lowest vacancy rates of any capital city market, with just 1.8 per cent of rental properties vacant, followed by Melbourne at 2.9 per cent.
“A slowdown across some of the previously strong resource-intensive areas of Australia can be attributed to a downturn in overall housing market conditions within these regions,” Mr Kusher added.