Vacancy rates remain low Australia-wide, resulting in higher rents and a growth in returns for investors, according to the latest industry report from Westpac.
Westpac's Residential Property Monitor for July 2007 shows that all capital cities with the exception of Perth recorded rental growth over the quarter for 2 bedroom `other' dwellings. Growth ranged from 3.2 per cent in Sydney to 16.7 per cent in Darwin.
Supply continued to fall in May, according to the report.
"On a seasonally adjusted basis, housing approvals fell 3.2 per cent in May, following three consecutive monthly increases driven by Queensland and Western Australia. Nationally, housing approvals sit 19 per cent below the high of 2003, and 5 per cent below long term average."
Approvals for `other dwellings' fell 10 per cent in May 2007, following a 6 per cent increase in April. The only major state to record an increase in approvals over May was Western Australia. `Other dwelling' approvals are now approximately 45 per cent below their 2003 high, and 21 per cent below long term average (from 1997).
On the other hand, demand rose in May.
The report shows that the number of finance commitments to construct or buy a new owner occupied dwelling rose 0.7 per cent in May, following a 1.7 per cent fall in April.
Levels are now 4 per cent above long term average (since 1985). Commitments for new dwellings are now right on the October 2003 high but remain 13 per cent below the high of January 2002.
The number of commitments for existing owner occupied dwellings (excluding re-financing) rose 1.6 per cent in May. This is the fourth consecutive monthly increase, to be up 9 per cent since January. Numbers are currently 41 per cent above long term average (from 1991), and 13 per cent above 2003 high levels.
The value of price adjusted investor finance rose by 5.4 per cent in May, to be up 25 per cent since November. Levels now sit 30 per cent below the October 2003 peak.
Price adjusted investor finance was 2 per cent below the 5 year average (2002 to 2007) in May and 14 per cent above the 10 year average (1997 to 2007).
Changes in vacancy rates were mixed in the March quarter. Sydney, Melbourne, Perth, Canberra and Darwin all recorded falls in vacancy ranging from -0.1 per cent in Sydney to -3.6 per cent in Darwin. Vacancy did not change in Hobart and rose by 0.2 per cent in Brisbane and 0.4 per cent in Adelaide. Vacancy rates continue to be very low and with the exception of Hobart remain below two per cent.
These low vacancy rates finally translated into increases in official rental data. All capital cities with the exception of Perth recorded rental growth over the quarter for 2 bedroom other dwellings. Growth ranged from 3.2 per cent in Sydney to 16.7 per cent in Darwin over the quarter.
Gross yields increased in all capital cities with the exception of Perth over the quarter, where they remained flat. Yields now range from 3.7 per cent in Perth to 5.5 per cent in Canberra.
