Sydney suburbs are dominating when it comes to rental returns, new research has revealed.
According to RP Data, Sydney regions accounted for 23 of the 35 best performing capital city rental markets over the past 12 months.
Woollahra in Sydney’s highly coveted Eastern Suburbs topped the list recording a 22.2 per cent increase in the median advertised rental price for houses from $900 in March 2010 to $1,100 in March 2011.
All in all, Sydney also recorded the strongest rental growth of all capital cities with median advertised rents growing 5.3 per cent, followed by Hobart at 4.5 per cent and at 4.4 per cent.
RP Data senior research analyst Cameron Kusher said investors could expect rental growth to be quite strong during 2011, with capital city rents increasing by just 3.2 per cent in the past two years, well below the average annual rental growth level of seven per cent during the last five years.
“Although there was a surge in building approvals last year, in many instances this new supply won’t actually get to the market during 2011. Added to that is the strict bank lending criteria which now requires significant pre-commitment of sales within new developments.
“Because of this we are seeing fewer new high density developments taking place in inner city areas. These regions are particularly attractive for renters as they provide significant levels of amenity. With less new supply in most capital cities it is likely to create greater competition for available stock and result in rental increases.”