Illawarra tenants facing a potential rent increase may have a case to request otherwise, an analyst suggests.
Domain Group has released the Domain Rental Report for the December quarter.
Domain senior research analyst Dr Nicola Powell said there was a degree of softening across some of the Illawarra’s rental markets.
Dr Powell noted that most of the region’s LGAs had modest increases or modest declines, but overall the Illawarra rental market was “pretty steady”.
The median weekly asking rent for houses has eased in the Kiama LGA ($530 as of December 2018, compared to $540 at December 2017).
However, unit rental prices there are still growing; $472.50 as of December 2018, compared to $450 a year prior.
Dr Powell said the biggest change in rent price growth has been Shellharbour units.
“This time last year it was recording double digit rental price growth,” she said.
“Half of last year, rents were increasing (there) on the annual basis by double digits. By the September quarter it had really eased, and now it’s declining slightly.”
The median weekly rent for Shellharbour units was $370 at December 2018, compared to $380 in December 2017.
The median weekly rent for Shellharbour houses was $490 at December 2018; the figure was $480 at December 2017.
The median Wollongong house rent was $490 in December 2018; 12 months prior the figure was $495.
The median Wollongong unit rental price remained at $380 when compared to December 2017.
Dr Powell said looking to 2019 in the Illawarra, “we’re likely to see more of a steady performance for tenants”.
She said the aforementioned figures could be helpful for tenants, particularly those who may have leases that are expiring.
“If you’ve got a landlord who’s looking to hike those rents, when you compare it to what’s actually happening in terms of the overall rental price movements, we are seeing relative stability.
“What it gives tenants is probably a bit of ammunition to support a case that their rent should remain the same.
“Particularly in some of those (LGAs) that have had a bit of a decline, it gives them strong grounds based on actual data of what the overall market performance is doing.”
Dr Powell said rents are currently holding up better in the Illawarra region when compared to what’s happening in the Sydney market.
According to the report, Sydney house rents have declined annually for the first time in more than 12 years. Sydney is also no longer the nation’s most expensive capital city to rent a house.
Canberra house rents have jumped, making the capital the most expensive city to rent a house in Australia.
For the first time on record, Sydney unit rents have declined for two consecutive quarters, with rents hitting an almost two-year low.
Dr Powell also said in the recent past, investors had a tendency to look towards Sydney and Melbourne due to the strong capital gains.
However, she said with Sydney property purchase prices declining, investors were starting to look elsewhere for potential options.
“I’m not necessarily saying the Illawarra region is one of those targets for investors, but the gross yields are certainly higher,” she said.
“This is especially the case with Wollongong units; they’re the strongest gross yield at 4.07 per cent (as of December 2018), and they have increased slightly year-on-year.
“Investors I think will start to look to other markets, and I think regional areas have been on the target list for investors for a little while now.”