Investment Property Market Snapshot

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Rental growth accelerates, yields compress
Rental growth is accelerating in most capital cities, but gross rental yields are continuing to compress, according to CoreLogic’s Housing Market and Economic Update for August. Annual change in weekly rents: Canberra (+8.9 per cent), Darwin (-5.4), Hobart (+5.7), Perth (-7.5), Adelaide (+1.4), Brisbane (+0.3), Melbourne (+4.4), Sydney (+5.1) – combined capitals 2.5 per cent. Current gross rental yields: Canberra (4.4 per cent), Darwin (4.9), Hobart (5.5), Perth (3.6), Adelaide (4.0), Brisbane (4.2), Melbourne (2.7), Sydney (2.9) – combined capitals 3.1 per cent. 
 
Capital gains moderate
CoreLogic’s Home Index Values for July recorded a combined capital city rise of 2.2 per cent, moderating from 3.6 per cent in February. The best performing capital over the quarter was Canberra at +4.9 per cent, with the worst performance recorded in Darwin with -6.8 per cent. Sydney remains the most expensive capital with a median dwelling price of $856,000 and Hobart is the cheapest at $338,000.
 
Asking rents down
Average asking rents across the capital cities for August were down marginally to $547 p/w for houses (-0.2 per cent) and $438 p/w for units (-0.7 per cent), according to figures from SQM Research. 
 
Investor activity rises
The latest ABS data has shown home loan approvals rose 0.5 per cent higher in June. The value of total housing finance rose 0.8 per cent to $33.3 billion, with the rise being driven by a 1.6 per cent lift in the value of loans for investment housing. Growth in the value of investment lending approvals was recorded at 5.7 per cent for the year to June. Figures from RateCity revealed investor activity increased 1.6 per cent over July, with the percentage of fixed rate loans at the highest level since November 2013 (17.5 per cent in June).
 
Demand for property up
REA Group Property Demand Index for August has shown demand for property surged in July, with only NSW apartments recording a decrease. Across Australia buyer demand was up 24.8 per cent year on year: WA (+4.5 per cent), NT (+18.8), SA (+8.8), QLD (+22.1), NSW (+29.6), ACT (+40.6), VIC (+35) and TAS (+74). Renter demand nationally was up 19.2 per cent year on year for all dwellings: WA (+15.5), NT (+24.5), SA (+34.5), QLD (+14.1), NSW (+11.8), ACT (+38.7), VIC (+29.2) and TAS (+45.4).
 
Mining town rent recovery
Figures from SQM Research are showing a rental recovery in a number of mining towns. Echoing the recovery in iron ore prices, the rental situation on towns like WA’s Karratha is improving with falling vacancy rates, signs that asking rents may be improving and implied yields rising. The uptick is also being evidenced in other WA towns reliant on iron ore mining such as Port Hedland and Newman, and also in Queensland’s Gladstone and Moranbah.
 
Landlords bear brunt of low CPI
Housing Group CPI figures for the June quarter increased by 0.3 per cent and by 2.4 per cent over the last year to June 2017. Rents only rose 0.2 per cent for the quarter and 0.6 per cent for the last year, providing relief for renters but giving landlords a minimal rise in profits, according to REIA.