Investment Property Market Snapshot

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Investor activity slows

The value of investment housing commitments decreased 1.4 per cent in May, according to the latest figures from the ABS. This follows a fall of 2.5 per cent in April and brings investors’ share of new loans to 37.3 per cent (down from 40 per cent at the start of 2017). JP Morgan noted that investor lending over the past six months had contracted at an annualised pace of almost 15 per cent. 

Vacancy rates rise, rents moderate

The latest data from SQM Research has revealed national vacancy rates rose to 2.4 per cent in June, up from 2.2 per cent in May. In July, the average capital city weekly asking rents for houses was down 0.5 per cent to $546 p/w and units remained unchanged at $440 p/w.

Annual rental growth

The June quarter saw rental growth rates rise 2 per cent over the past 12 months, according to CoreLogic: Canberra (+8.4 per cent), Hobart (+6.2), Sydney (+4.5), Melbourne (+4.1), Adelaide (+1.1), Brisbane (-0.2), Perth (-8.3) and Darwin (-5.4). Despite the higher pace of rental growth in some cities, dwelling values rose at a faster pace and resulted in falling rental yields.

Capital gains

CoreLogic has found that combined capital city dwelling values increased 9.6 per cent in FY17, up from 8.3 per cent in FY16: Sydney (+12.2 per cent), Melbourne (+13.7), Brisbane (+2), Adelaide (+2.4), Perth (-1.3), Hobart (+6.8), Darwin (-7) and Canberra (+9.6).

Property value forecasts 

Modelling by research group BIS Oxford Economics forecast median house price growth for most capital cities over the next three years: Hobart (+11 per cent), Brisbane (+7), Melbourne (+5), Perth (+3), Adelaide (+2) and Sydney (-4 per cent). Unit prices across the capitals are forecast to fall, with the exception of Adelaide where prices are expected to hold steady.

Rental yields

Domain State of the Market Report has analysed the gross rental returns over the June quarter. Hobart was the capital city with the highest gross rental yields for houses at 5.38 per cent, followed by Darwin (4.97), Adelaide (4.57), Brisbane (4.5), Canberra (4.47), Perth (4.14), Melbourne (3.48) and Sydney (3.23). Canberra topped the list for unit gross rental yields with 5.71 per cent, followed by Hobart (5.55), Darwin (5.51), Adelaide (5.12), Brisbane (4.86), Melbourne (4.52), Perth (4.38) and Sydney (3.94).

Commercial vacancies down

JLL research has found the national CBD office vacancy rate has dropped to its lowest point in more than four years, coming in at 10.9 per cent in the June quarter. Vacancy rates improved across all monitored capitals: Melbourne (7.1 per cent), Sydney (6.4), Perth (22.7), Brisbane (15.5), Canberra (11.8) and Adelaide (16).