The latest data from CoreLogic shows returns from housing are beginning to slow down, as well as the best and worst states and territories for returns.
The CoreLogic Accumulation Index, which compares value changes and gross rental yield, has revealed the total of annual housing returns over the last year is at 13.5 per cent, while units return 12 per cent.
Unsurprisingly, CoreLogic stated capital city returns are higher than regional returns, with over the last year to August 2017, total returns for houses and units were at 14 per cent and 12.3 per cent respectively.
In comparison, regional houses and units over the same period are at 11.7 per cent and 10.2 per cent.
Out of every state and territory, Hobart is the best market for total returns for both houses and units, at 19.8 per cent and 17.6 per cent respectively. CoreLogic states this is due to strong annual growth over the last year and some of the highest rental yields.
Following this for houses and units is Sydney at 17 per cent and 15.4 per cent, Melbourne at 16.9 per cent and 13 per cent, Canberra at 14.5 per cent and 8.2 per cent, Adelaide at 10.2 per cent and 6.2 per cent, Brisbane at 8.8 per cent and 1.8 per cent, Perth at 1.1 per cent and 0.9 per cent, which leaves Darwin as the worst state or territory for total annual returns at 6.7 per cent and -8.5 per cent.
The Property Pulse has noted that total returns will continue to moderate over the next few months, with capital growth peaking and rental yields at record lows.
It has also mentioned the fact that this index is on the assumption properties will be occupied for an entire year, which may not always happen in reality.
“The total returns data, particularly for the past decade, shows why housing investment has been so popular and hit record highs,” the Property Pulse has stated.
“Returns have been fairly consistent and less volatile than equities, however, the ongoing strength and the evidence of a recent slowdown should give investors pause for thought.
“With mortgage rates starting to increase for investors, record-high levels of new housing supply and value growth slowing, housing investors shouldn’t assume that the types of returns seen over recent years will continue to be replicated going forward.”