Demand outstripping supply in cities: RP Data
The current supply of properties in capital cities is struggling to meet an upswell of demand from buyers, causing home values to rise and rental yields to fall, a property research analyst has said.
Cameron Kusher from RP Data said all indicators suggest demand is surging in the city markets.
Across the capitals, vendor discounting has fallen from 6.2 per cent to 5.6 per cent in the past 12 months.
Meanwhile, properties are selling on average in 51 days compared to 70 days a year ago.
Despite more buyers putting their properties up for sale, the overall stock levels have fallen, according to Mr Kusher.
“This data indicates there are a lot of new properties being listed for sale. However, the high level of demand is seeing these properties sell at a rapid pace, reducing total stock levels,” he said.
While new listings rose by 18.8 per cent over the year, the total number of properties for sale is lower, at 3.8 per cent.
This frantic sales activity is causing the rental market to soften.
“As sales volumes have increased, it is clear rental pressures in the market are abating,” Mr Kusher said.
Rental rates have climbed by 2.3 per cent for houses and 3.2 per cent for units, well below the five-year average of 3.9 per cent and 4.1 per cent respectively.
As value growth outpaces rental hikes, yields have also eased.
In March 2013, gross rental yields were 4.1 per cent for houses and 4.9 per cent for units across the cities.
Over the year, yields have weakened to 3.8 per cent for houses and 4.6 per cent for units.
“With growth in home values much stronger than rental growth, it is reasonable to expect a further deterioration of rental yields over the coming months, particularly in Sydney, Melbourne and to a lesser degree, Perth, where value growth has been much stronger,” Mr Kusher said.