Why are rental yields increasing after historic lows?

As we’re all aware, the Australian property market is in a downturn. CoreLogic has reported a 5.6% annual decline in values nationally which is the largest annual fall since mid-1983.

For property investors, rental growth has slowed to 0.4% annually but Sydney (-3%) and Darwin (-6%) are the only two capital cities in the negative. As you can see in my chart below, growth has slowed like this twice in the past decade.

So despite rents not growing, investment yields have. Lower property values mean higher yields because the property can be purchased for thousands of dollars cheaper than in the past, while cash coming in from the asset (rent) has continued to rise for most dwellings.

Property investment remains an excellent option for many Australians. If you want to discuss whether it’s right for you, click here for a chat