Investment property market overview February 2019

We have prepared the numbers, this article provides a quick summary of metrics we see as the most important for property investment as of January 2019.

Asking rents, rental vacancies and movements.

Generally asking rents have trended up Australia wide. All capital cities rents increased by 0.7% in January 2019. Rents currently are $559 for houses and $439 for units.[1] However, the numbers are rather different from capital city to another.

Sydney asking rents have actually decreased over the period for both houses and units to $705 and $508 respectively, though we are seeing reversal of losses in February. At this stage it is too early to call as Sydney rents declined a very steep 0.7% over the period. Sydney vacancy rates continue to increase, up 0.4% to 3.6%, the highest we have seen in a while.

Canberra asking rents have reached $635 for houses and $468 for units. Canberra remains a very attractive market with vacancies at 1.3%, this is a slight increase of only 0.4% compared to previous period. The worrying trend is that asking rents are starting to decline with asking rents in Canberra decreased by 0.4%.

Darwin house asking rents have reached $506 and units are asking $391. This is a decrease of 0.6%, the second highest decrease among the capital cities after Sydney. As we have mentioned in our previous publications, we remain our negative outlook on Darwin. We don’t believe the northern capital property market reached the bottom yet. Vacancies in Darwin remain stubbornly high at 4.3% and continue increasing with this period seeing a 0.3% increase.

Brisbane house rents are asking $457 and units $376, this is an increase of 0.2% compared to previous period. Again, we were right in calling Brisbane rents in our prior publications. We have mentioned that we remain cautiously optimistic about Brisbane in 2019, with a more positive 2020 outlook. Vacancies, however, increased in Brisbane standing at 3.2% an increase of 0.2%. We remain optimistic as it seems the oversupply of units is being absorbed relatively painlessly.

Melbourne house rents are at $541 and units at $409. Melbourne did not follow Sydney lead and remained steady with little to no movement. Strong population growth remains the saving grace of this city, however we remain cautious as Melbourne tends to follow Sydney property market, albeit with a slight lag. Melbourne vacancies increase to 2.2% an increase of 0.3% compared to the previous period. If the Vacancies roll over 2.5% we are likely to revise our view on Melbourne.

Adelaide asking rents are $395 for houses and $302 for units. Adelaide is yet another property market that has seen positive signs of life, similarly to Brisbane property market. Adelaide rents are up a modest 0.1%. Vacancy rates are up an equally modest 0.1% standing at 1.3%. We remain happy about Adelaide vacancy rates.

Hobart asking rents are $421 for a house and $341 for units. Vacancy rates remain extremely low at 0.4%. These low vacancy rates pushed rents a significant 0.7% up. While this is great news for some property investors we remain cautious on Hobart. This city tends to have surges, booms and busts. We are happy to watch Hobart from the sidelines. We don’t believe Hobart growth trajectory is sustainable.

Perth house asking rents are at $439 and units are asking $326. This is a modest increase of 0.3%. Perth is showing signs of recovery from the mining bust, however it is too early to call. If Perth sustains decreasing vacancy rates, we would become more optimistic about the city. Perth vacancy rates remained at 3.4%, little change to previous period.

[1] SQM Research

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