Quarterly Rental Review - June Quarter, 2020 Released July 2020 - My Sunshine ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Quarterly Rental Review June Quarter, 2020 Released July 2020
CoreLogic June 2020 Quarterly Rental Review
Overview
• Nationally, rent values declined 0.3% in the month of June, • The narrow differential between Sydney and Canberra rents
and 0.5% over the quarter. This was the largest quarterly fall continue, despite the COVID-19 downturn. Estimated median
in rents since September 2018, and further falls are expected asking rents in Sydney fell 1.6% in the June quarter, against
in the coming months. a 1.7% decline in Canberra rents. Sydney remained the more
expensive in terms of median asking rents, at $568 per week.
• Capital city rents have been more immediately impacted by This was just $2 higher than the estimated median asking
the negative economic shock resulting from COVID-19. rent in Canberra.
Capital city rents fell 0.7% in the June quarter, compared with
a 0.2% rise in rents across regional Australia. • Gross rental yields were 3.73% nationally in the June
quarter, down 3 basis points over the Mach quarter and 41
• COVID-19 has pivoted the trajectory of rental market basis points over the year.
performance, with six of the capital city dwelling markets
seeing a quarterly decline in rental values. The Hobart rent • In the 12 months to June, rental yields fell across seven of
market had the largest value falls in the June quarter at the eight capital city markets. Perth was the only exception,
2.3%, followed by Sydney at 1.3%. where yields increased a modest 3 basis points over the
year.
• Four of the eight capital cities saw no growth or falls in rent
values over the year to June. Perth and Adelaide still saw • In the June quarter of 2020, regional rental yields slipped 3
growth in rent values over the year, at 2.2%. basis points to 4.93%. The combined capital cities regions
fell 2 basis points in the quarter to 3.44%.
COVID-19 pivots the trajectory of rental markets
Rent values nationally fell half a percent in the June quarter, taking annual growth to just 0.7%.
The decline in rent values over the quarter came at a time when the rental market was already relatively weak. Annualised gro wth
in national rent values was just 1.1% in the five years to June 2020, compared with annualised growth in the selected living cost
index of 1.4% in the 5 years to March for employee households. In other words, rents have generally seen softer growth than t he
growth in general cost of living for most households.
Prior to the fall in rent values over the June quarter, growth in rents had seen some momentum building, with the national
CoreLogic rental index recording consecutive increases between September 2019 and March 2020. These signs of rebounding
rent values came as investor participation in the market was falling from 2017, and subsequently, the rate of new supply addi tions
in rental properties had been falling.
ABS finance data indicates that the change in monthly lending values to investors averaged -1.3% between September 2017 and
December 2018 (when a temporary limit on interest only lending was introduced) off the back of tighter lending conditions.
Against steady migration, this contributed to a very gradual tightening of rental markets.
Change in rents Yields
Region Median rent Month Quarter 12 months Current 12 months ago
Sydney $568 -0.8% -1.3% -1.0% 2.92% 3.47%
Melbourne $453 -0.6% -1.0% 0.0% 3.20% 3.69%
Brisbane $439 -0.1% -0.6% 0.6% 4.37% 4.63%
Adelaide $397 0.2% 0.1% 2.2% 4.41% 4.45%
Perth $396 0.3% 0.9% 2.2% 4.38% 4.35%
Hobart $454 -0.9% -2.3% -0.1% 4.71% 5.25%
Darwin $442 0.3% -0.1% -1.0% 5.86% 6.02%
Canberra $566 -0.1% -0.4% 1.4% 4.68% 4.81%
Combined capitals $466 -0.4% -0.7% 0.2% 3.44% 3.87%
Combined regionals $390 0.1% 0.2% 2.1% 4.93% 5.14%
National $441 -0.3% -0.5% 0.7% 3.73% 4.14%
© 2020 CoreLogic, Inc. All rights reserved. Proprietary & Confidential. 2 | Quarterly Rental ReviewCoreLogic June 2020 Quarterly Rental Review
However, the COVID-19 environment shifted this trajectory. Quarterly change in rental rates
Closed international borders created a significant shock to
rental demand, as historically the majority of new migrants to HOUSE UNITS
Australia have been renters. Furthermore, job losses in
sectors such as hospitality, tourism and the arts, which ABS
payroll data estimates has been around 20%, have also
impacted demand, because households in these sectors are
more likely to rent than in other industries.
Hobart leads decline in rents over the
June quarter
June quarter data provides a better understanding of how
rental markets have been impacted by the first round of
lockdowns in response to COVID-19, with some of the
strictest lockdowns commencing from the 25 th of March. June
quarter rent data has also illuminated the difference in
performance across capital cities, which have varied levels of
exposure to vulnerable work force sectors and international
migration.
The largest decline in rent values at the capital city level was
across Hobart, where rents fell 2.3% over the June quarter. 12 month change in rental rates
This was the most severe quarterly decline in rent values for
HOUSE UNITS
the capital city since September 2012, when rents declined
2.4% off the back of weak economic growth and a spike in
unemployment.
There are a couple of key rental demand factors that have
been impacted more acutely across Hobart. The city has
recently had a workforce exposure to accommodation and
food and arts and recreation services of 12.7%, compared
with an average of 9.0% across other capital city regions.
Higher rates of job loss in these sectors are likely to have
impacted rent prices.
Furthermore, Hobart is estimated to have a relatively high
level of Airbnb accommodation. With anecdotes emerging of
Airbnb owners putting this stock to the long term rental
market, the additional supply may have served to further
reduce rents.
Additionally, rental affordability was already stretched across 10 year change in rental rates
Hobart, with households dedicating an average of 34% of
their income to service rental payments; the highest of any HOUSE UNITS
capital city.
The decline across Hobart units has been much deeper at -
3.7%, compared with the quarterly decline in house rents of -
2.0%.
Similar trends affect inner-city areas of Sydney and
Melbourne, where rents declined significantly across these
greater capital cities in the June quarter. Sydney rent values
fell 1.3% across Sydney and 1.0% across Melbourne in the
June quarter. Sydney and Melbourne unit rent markets each
saw rent value declines of about 2.0% in the period.
The Brisbane rental market saw a 0.6% decline in the June
quarter, following an increase in rents of 0.6% in the March
quarter, thus eroding some of the gains in rent values seen
earlier in the year.
© 2020 CoreLogic, Inc. All rights reserved. Proprietary & Confidential. 3 | Quarterly Rental ReviewCoreLogic June 2020 Quarterly Rental Review
Like Sydney and Melbourne, Brisbane rents have seen an interruption to a gradual tightening in rents, as new construction had
slowly moderated across the city.
Adelaide and Perth were the only capital cities to see an increase in rents over the June quarter. For Adelaide, the property
market more broadly has been less susceptible to COVID-19, due to the relative stability of the market, and low historic
participation of investors in the market.
Across Perth, rental values increased 0.9% over the quarter, which was the highest increase of the capital city rent markets. In
annual terms, rent values across the capital city are up 2.2%. While this is a strong increase, growth is softening, and fell 2.5%
from the annual growth rate to June 2019.
The continued rental rate increases across Perth are a reflection of improved patterns in migration, continued withdrawal of
investors since the mining boom, and less exposure to industries heavily affected by COVID-19. Despite recent rental
increases, momentum may slow across the Perth rental market in the second half of 2020, as a prolonged economic downturn
across Australia becomes more broad-based.
Unit yields tumble as rents fall faster than values
Nationally, rent yields fell 41 basis points in the year to June, as property values rose 7.8% over the year compared with a 0.7%
increase in rental values. This is in line with a rapid price rebound between June 2019 and the start of 2020.
The national dwelling rent yield is currently 3.73%, which is just 2 basis points off the record low reached in August 2017.
The decline in rent yields has been led by units, where rents nationally fell 1.4% against a 0.3% decline in unit values over the
quarter. The larger impact on rents than prices across various unit markets has driven unit yields down to 4.0%. This is the
lowest yield on record for Australian units, and the graph below shows the rapid decline in returns for units over the quarter.
The biggest fall in unit yields was across Hobart and Sydney, which fell 60 basis points over the year to June. The unit rent yield
for Hobart reached a record low 4.8% in the June quarter, while Sydney unit rent yields were also at a record low of 3.4%.
The highest unit rent yield was in Darwin, at 6.8%. Despite the rental market tightening across Darwin, investment conditions
may still be unappealing to investors, where annualised capital growth across the market was -9.8% over the past 5 years.
Gross rental yields over time Gross rental yields, houses and units
HOUSE UNITS
HOUSE UNITS
© 2020 CoreLogic, Inc. All rights reserved. Proprietary & Confidential. 4 | Quarterly Rental ReviewCoreLogic June 2020 Quarterly Rental Review
Conditions among house rent yields where fairly similar, but yields have started to stabilize as property values fell faster than
rents. Nationally, house yields were down 52 basis points year-on-year, but increased 1 basis point over the quarter. This
occurred against a -0.9% decline in house values while house rents fell 0.7% in the quarter.
House rent yields were lowest across Sydney, at 2.7%. As in the unit space, Darwin houses present the highest house rent at
5.4%, but capital growth has seen Darwin houses fall in value with a 5 year annualised growth rate of -4.7%.
As well as the decline in rental demand, the uncertain economic conditions of COVID-19 has likely also created a drastic decline
in housing demand from investors. This is apparent in ABS finance data, which showed new lending to investors fell 15.6% in t he
month of May, as opposed to a 10.2% decline in new lending to owner-occupiers.
One positive for landlords is that mortgage rates are settling to a new record low, as the RBA set the cash rate to an effect ive
lower bound of 0.25% in late March. The cash rate is expected to stay at this record low for years to come, until the
unemployment rate reflects full employment, and inflation is comfortably within a 2-3% target band. As a result, average new
mortgage rates reported by the RBA hit a new record low in May, at 3.15%.
Key rental and yield statistics
Combined Combined
Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra National
capitals regionals
All Dwellings
Median rent $568 $453 $439 $397 $396 $454 $442 $566 $466 $390 $441
Monthly change -0.8% -0.6% -0.1% 0.2% 0.3% -0.9% 0.3% -0.1% -0.4% 0.1% -0.3%
Quarterly change -1.3% -1.0% -0.6% 0.1% 0.9% -2.3% -0.1% -0.4% -0.7% 0.2% -0.5%
Year-to-Date change 0.3% 0.1% 0.0% 1.4% 2.6% -1.3% 0.6% 1.0% 0.6% 1.2% 0.7%
Year-on-Year change -1.0% 0.0% 0.6% 2.2% 2.2% -0.1% -1.0% 1.4% 0.2% 2.1% 0.7%
Current yield 2.9% 3.2% 4.4% 4.4% 4.4% 4.7% 5.9% 4.7% 3.4% 4.9% 3.7%
Yield 12 mths ago 3.5% 3.7% 4.6% 4.5% 4.4% 5.3% 6.0% 4.8% 3.9% 5.1% 4.1%
Houses
Median rent $609 $460 $460 $410 $403 $470 $481 $601 $471 $395 $442
Monthly change -0.6% -0.3% 0.0% 0.2% 0.4% -0.6% 0.4% 0.0% -0.2% 0.1% -0.1%
Quarterly change -0.7% -0.3% -0.4% 0.2% 1.0% -2.0% 0.1% -0.3% -0.2% 0.2% -0.1%
Year-to-Date change 0.8% 1.1% 0.3% 1.5% 2.8% -1.1% 0.7% 1.0% 1.1% 1.2% 1.2%
Year-on-Year change -0.2% 1.4% 1.1% 2.4% 2.3% 0.0% -1.9% 1.5% 1.0% 2.3% 1.4%
Current yield 2.7% 2.8% 4.2% 4.2% 4.3% 4.7% 5.4% 4.4% 3.3% 4.9% 3.6%
Yield 12 mths ago 3.2% 3.3% 4.4% 4.3% 4.2% 5.2% 5.7% 4.5% 3.7% 5.1% 4.0%
Units
Median rent $536 $446 $398 $343 $356 $391 $381 $485 $457 $367 $439
Monthly change -1.1% -1.1% -0.4% 0.0% 0.0% -1.8% 0.0% -0.5% -0.9% 0.0% -0.8%
Quarterly change -2.1% -2.0% -1.0% -0.2% 0.1% -3.7% -0.3% -0.7% -1.8% 0.3% -1.4%
Year-to-Date change -0.5% -1.3% -0.6% 0.7% 1.4% -2.0% 0.4% 0.8% -0.6% 1.1% -0.3%
Year-on-Year change -2.1% -1.9% -0.8% 1.5% 1.2% -0.5% 0.4% 1.2% -1.5% 1.5% -1.0%
Current yield 3.4% 3.9% 5.2% 5.3% 5.2% 4.8% 6.8% 5.8% 3.9% 5.2% 4.0%
Yield 12 mths ago 4.0% 4.5% 5.5% 5.4% 5.2% 5.4% 6.7% 5.8% 4.4% 5.5% 4.6%
© 2020 CoreLogic, Inc. All rights reserved. Proprietary & Confidential. 5 | Quarterly Rental ReviewAbout CoreLogic
CoreLogic Australia is a wholly owned subsidiary of CoreLogic (NYSE: CLGX), which is the largest property data and analytics
company in the world. CoreLogic provides property information, analytics and services across Australia,
New Zealand and Asia, and recently expanded its service offering through the purchase of project activity and building cost
information provider Cordell. With Australia’s most comprehensive property databases, the company’s
combined data offering is derived from public, contributory and proprietary sources and includes over 500 million decision po ints
spanning over three decades of collection, providing detailed coverage of property and other encumbrances such as tenancy,
location, hazard risk and related performance information.
With over 20,000 customers and 150,000 end users, CoreLogic is the leading provider of property data, analytics and related
services to consumers, investors, real estate, mortgage, finance, banking, building services, insurance, developers, wealth
management and government. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory
and geo spatial services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and
mitigate risk. CoreLogic employs over 650 people across Australia and in New Zealand. For more information call 1300 734 318
or visit www.corelogic.com.au
Granular Data and Analytics Driving Growth in your Business
CoreLogic RP Data produces an advanced suite of housing market analytics that provides key insights for understanding
housing market conditions at a granular geographic level. Granular data is often used for portfolio analysis and
benchmarking, risk assessments and understanding development feasibility and market sizing. It gives industry
professionals valuable modules which provide essential analytics and insights for decision making and strategy formation
within the residential property asset class. We can tailor reports to suit your business requirements.
Call us on 1300 734 318 or email us at ask@corelogic.com.au or visit us at www.corelogic.com.au
Market Scorecard: Monitor and measure performance of an Economist Pack: A suite of indices and indicators designed
individual office or a Franchise brand month on month through specifically for Australian economic commentators who require
a detailed view of the Real Estate Listing and Sales market the most up to date and detailed view of housing market
share across Australia. With the ability to gather market share conditions. The economist pack includes the CoreLogic RP
statistics within your active market this product is designed to Data Hedonic indices for capital cities and
identify the competing brands and independents at a suburb, ‘rest of state’ indices, the stratified hedonic index, hedonic total
postcode, user defined territory and State level. Easily locate return index, auction clearance rates and median prices.
growth opportunities and market hotspots allowing you to view
the performance of the established offices in these new areas Investor Concentration Report: Understanding ownership
of interest. concentrations is an important part of assessing risk. Areas
with high investor concentrations are typically allocated higher
Market Trends: Detailed housing market indicators down risk ratings due to the over-representation of a particular
to the suburb level, with data in time series or snapshot segment of the market. Through a series of rules and logic,
delivered monthly. CoreLogic RP Data’s Market Trends data is CoreLogic RP Data has flagged the likely ownership type of
segmented across houses and units. The Market Trends data every residential property nationally as either owner occupied,
includes key housing market metrics such as median prices, investor owned or government owned.
median values, transaction volumes, rental statistics, vendor
metrics such as average selling time and vendor discounting Mortgage Market Trend Report: CoreLogic is in a unique
rates. position to monitor mortgage related housing market activity.
Transaction volumes, dwelling values and mortgage related
CoreLogic Indices: The suite of CoreLogic Indices range from valuation events all comprise our Mortgage market trend report
simple market measurements such as median prices through which provides an invaluable tool for mortgage
to repeat sales indices and our flagship hedonic home value industry benchmarking and strategy.
indices. The CoreLogic RP Data Hedonic index has been
specifically designed to track the value of a portfolio of
properties over time and is relied upon by Australian regulators
and industry as the most up to date and accurate
measurement of housing market performance.
© 2020 CoreLogic, Inc. All rights reserved. Proprietary & Confidential. 6 | Quarterly Rental ReviewDisclaimers
© 2020 Copyright RP Data Pty Ltd trading as CoreLogic of Victoria accepts no responsibility or liability whatsoever for any
Asia Pacific (CoreLogic), Local, State, and Commonwealth errors, faults, defects or omissions in the information supplied.
Governments. All rights reserved. No reproduction, distribution
or transmission of the copyrighted materials in this publication Western Australian Data
is permitted whether in whole or in part. Based on information provided by and with the permission of
the Western Australian Land Information Authority (2017) trading
The information provided in this publication is current as at the as Landgate.
publication date only. This publication is supplied on the basis
that while CoreLogic believes all the information in it is deemed Australian Capital Territory Data
reliable at the publication date, it does not warrant its accuracy The Territory Data is the property of the Australian Capital
or completeness and to the full extent allowed by law excludes Territory. No part of it may in any form or by any means
liability in contract, tort or otherwise, for any loss or damage (electronic, mechanical, microcopying, photocopying, recording or
sustained by yourself, or by any other person or body corporate otherwise) be reproduced, stored in a retrieval system or
arising from or in connection with the supply or use of the whole transmitted without prior written permission. Enquiries should be
or any part of the information in this publication through any cause directed to: Director, Customer Services ACT Planning and Land
whatsoever and limits any liability it may have to the amount paid Authority GPO Box 1908 Canberra ACT 2601.
to CoreLogic for the supply of such information.
Tasmanian Data
This publication provides general information only – it is not This product incorporates data that is copyright owned by the
intended as advice and should not be relied upon as such. Crown in Right of Tasmania. The data has been used in the
The material has not been prepared by taking into account product with the permission of the Crown in Right of Tasmania.
your investment objectives, financial situation or personal The Crown in Right of Tasmania and its employees and agents:
needs. You should make your own inquiries and if necessary
take independent financial advice tailored to your specific a) give no warranty regarding the data's accuracy, completeness,
circumstances before making any investment decisions. currency or suitability for any particular purpose; and
Queensland Data b) do not accept liability howsoever arising, including but not
Based on or contains data provided by the State of limited to negligence for any loss resulting from the use of
Queensland (Department of Natural Resources and Mines) or reliance upon the data.
2017. In consideration of the State permitting use of this data
you acknowledge and agree that the State gives no warranty in Base data from the LIST © State of Tasmania
relation to the data (including accuracy, reliability, completeness, http://www.thelist.tas.gov.au
currency or suitability) and accepts no liability (including without
limitation, liability in negligence) for any loss, damage or costs About Us
(including consequential damage) relating to any use of the data. CoreLogic Australia is a wholly owned subsidiary of CoreLogic
Data must not be used for direct marketing or be used in breach (NYSE: CLGX), which is the largest property data and analytics
of the privacy laws. company in the world. CoreLogic provides property information,
analytics and services across Australia, New Zealand and Asia,
South Australian Data and recently expanded its service offering through the purchase
This information is based on data supplied by the South of project activity and building cost information provider Cordell.
Australian Government and is published by permission. With Australia’s most comprehensive property databases,
Copyright in that data belongs to the South Australian the company’s combined data offering is derived from public,
Government. The South Australian Government does not accept contributory and proprietary sources and includes over 500
any responsibility for the accuracy or completeness of the million decision points spanning over three decades of collection,
published information or suitability for any purpose of the providing detailed coverage of property and other encumbrances
published information or the underlying data. such as tenancy, location, hazard risk and related performance
information.
New South Wales Data
With over 20,000 customers and 150,000 end users, CoreLogic
Contains property sales information provided under licence from
is the leading provider of property data, analytics and related
the Land and Property Information (“LPI”). CoreLogic is
services to consumers, investors, real estate, mortgage,
authorised as a Property Sales Information provider by the LPI.
finance, banking, building services, insurance, developers,
wealth management and government. CoreLogic delivers value
Victorian Data
to clients through unique data, analytics, workflow technology,
The State of Victoria owns the copyright in the Property Sales
advisory and geo spatial services. Clients rely on CoreLogic
Data which constitutes the basis of this report and reproduction
to help identify and manage growth opportunities, improve
of that data in any way without the consent of the State of Victoria
performance and mitigate risk. CoreLogic employs over 650
will constitute a breach of the Copyright Act 1968 (Cth). The State
people across Australia and in New Zealand. For more
of Victoria does not warrant the accuracy or completeness of
information call 1300 734 318 or visit www.corelogic.com.au
the information contained in this report and any person using or
relying upon such information does so on the basis that the State
© 2020 CoreLogic, Inc. All rights reserved. Proprietary & Confidential. 7 | Quarterly Rental ReviewToll Free: 1300 734 318
This publication reproduces materials and content owned or licensed by RP Data
Pty Ltd trading as CoreLogic Asia Pacific (CoreLogic) and ma include data, statistics,
estimates, indices, photographs, maps, tools, calculators (including their outputs),
commentary, reports and other information (CoreLogic Data).
corelogic.com.au
2020 CoreLogic, Inc. All Rights Reserved. This material may not be
reproduced in any form without express written permission.You can also read
