Rental markets across Australia remained a mixed bag in the year to November, with Perth and Darwin rising as the best performers in terms of rental gains in both housing and unit segments, according to CoreLogic.
The national rental index registered a 3.2% increase for houses and a 3.1% decline for units over the year to November. Perth reported the highest increase in rents for houses at 8.6% while Darwin posted the strongest gain for units at 6.3%. What do these gains indicate about the two capital cities?
Eliza Owen, head of residential research at CoreLogic, said while these gains seem good news for landlords in the two states, they actually indicate a different thing.
"It is worth noting that the reason for such strong rental increases is the gradual withdrawal of investors from the market. Investors comprised only a small portion of market activity over the years following the mining downturn," she said.
In fact, the September finance data from the Australian Bureau of Statistics show that the share of investors was only 16.2% in Western Australia and 11.6% in the Northern Territory. These were the lowest rates of investor participation during the month.
The annual growth in rents across the two markets also contextualises the recent increases in rents. When compared to their peaks in 2013 and 2014, rents were lower by 11.7% in Perth and 21.6% in Darwin.
"The two cities could see the gradual re-entry of property investors, which would lift rental supply and support an easing in rental value growth over time," Owen said.