Rental yields hit record lows in two capitals

Melbourne’s houses decreased from 3.1 per cent in June 2015 to 2.9 per cent in June 2016, while units fell from 4.2 per cent to 4.0 per cent.

Sydney’s houses fell from 3.3 per cent to 3.0 per cent and units decreased from 4.3 per cent to 3.9 per cent over the same period.

In Brisbane, houses dropped from 4.4 per cent to 4.2 per cent while units fell from 5.4 per cent to 5.2 per cent.

Canberra’s houses decreased from 4.1 per cent to 4.0 per cent and units remained unchanged at 5.1 per cent.

In Adelaide, houses fell from 4.1 per cent to 4.0 per cent while units dropped 4.9 per cent to 4.8 per cent.

Hobart’s houses decreased from 5.3 per cent to 5.2 per cent and units rose from 5.2 per cent to 5.4 per cent.

In Perth, houses dropped from 4.0 per cent to 3.8 per cent while units fell from 4.6 per cent to 4.5 per cent.

Darwin’s houses decreased from 5.8 per cent to 5.1 per and units fell from 5.3 per cent to 3.9 per cent.

CoreLogic research director Tim Lawless said despite low mortgage rates, the low yield profile implies that the majority of recent investors will be experiencing a cash flow loss on their property after expenses are taken into account.

"Overall, the strong housing market conditions in Sydney and Melbourne are being reported in line with high auction clearance rates and resilient levels of mortgage-related activity, and are also supported by a robust level of consumer confidence," he said.

The report noted that capital city rents are recording their weakest annual change on record, and with value rises outpacing rental growth, rental yields are likely to see further reductions in the coming months.

[Related: Rent prices improve as market remains tight]