{"id":25214,"date":"2015-05-14T01:00:45","date_gmt":"2015-05-13T15:00:45","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=4550"},"modified":"2015-05-14T01:00:45","modified_gmt":"2015-05-13T15:00:45","slug":"watch-out-for-rental-yield-falls-john-mcgrath-2","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/watch-out-for-rental-yield-falls-john-mcgrath-2\/","title":{"rendered":"Watch out for rental yield falls  |  John McGrath"},"content":{"rendered":"<p>In his recent column in\u00a0<a href=\"http:\/\/www.switzer.com.au\/the-experts\/john-mcgrath-property-expert\/watch-out-for-rental-yield-falls\/\" target=\"_blank\" rel=\"noopener noreferrer\">Switzer<\/a>, John McGrath discusses the decline in rental yields across Australian capital cities.<\/p>\n<h4>Here&#8217;s what he said:<\/h4>\n<p>One of the trends likely to play a role in ultimately slowing Sydney\u2019s market down is declining rental yields.<br \/>\n<img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"alignright\" alt=\"John Mcgrath\" src=\"https:\/\/i0.wp.com\/propertyupdate.com.au\/wp-content\/uploads\/2014\/06\/JohnMcgrath-300x182.jpg?resize=300%2C182\" width=\"300\" height=\"182\" \/><\/p>\n<p>This will start to impact investor sentiment; which will have a flow-on effect for the market as a whole because investment activity is one of the things keeping the boom going.<\/p>\n<p>Investment activity is still very high, with 52.9% of all new loans in NSW going to investors, according to Australia\u2019s largest broker, AFG.<\/p>\n<p>Although weekly rents across the city are rising, they are not growing at anywhere near the pace of property prices, so the overall yield for today\u2019s investment purchasers is actually in decline at 3.4% for houses and 4.3% for apartments.<\/p>\n<p>Looking at the big picture though, it\u2019s not that big a deal when you can lock in a three-year fixed loan below 4% with the cash rate now at 2.0%.<\/p>\n<p>If you\u2019re planning to hold for the long term (as you always should), then you should only be buying if you can afford to pay the mortgage when rates are back to 6.5% or 7%-plus \u2013 which will not be in the short term but will happen eventually.<\/p>\n<p>In the meantime, there\u2019s the benefit of deductible expenses and negative gearing to help you deal with any shortfall.<\/p>\n<p>Problem is, many investors think short term and focus too much on what a property will put in their pockets each week, instead of the capital growth it will deliver over the long term \u2013 and that\u2019s where the big money is in property investment.<\/p>\n<p>RP Data has just released its quarterly rental report for March 2015, which gives us a snapshot of the rental market across the country.<\/p>\n<p><strong>Here\u2019s where we are at:\u00a0<\/strong><\/p>\n<p><strong>Sydney\u00a0<\/strong><\/p>\n<p>Median rent (houses) &#8211; $530 per week<br \/>\nYear-on-year (YOY) change \u2013 3.9%<br \/>\nMedian rent (apartments) &#8211; $500 per week<br \/>\nYOY change \u2013 2%<\/p>\n<p><strong>Melbourne<\/strong><\/p>\n<p>Median rent (houses) &#8211; $390 per week<br \/>\nYOY change \u2013 2.6%<br \/>\nMedian rent (apartments) &#8211; $370 per week<br \/>\nYOY change \u2013 1.4%<\/p>\n<p><strong>Brisbane<\/strong><\/p>\n<p>Median rent (houses) &#8211; $410 per week<br \/>\nYOY change \u2013 2.5%<br \/>\nMedian rent (apartments) &#8211; $390 per week<br \/>\nYOY change \u2013 0%<\/p>\n<p><strong>Adelaide<\/strong><\/p>\n<p>Median rent (houses) &#8211; $350 per week<br \/>\nYOY change \u2013 2.9%<br \/>\nMedian rent (apartments) &#8211; $300 per week<br \/>\nYOY change \u2013 0%<\/p>\n<p><strong>Perth<\/strong><\/p>\n<p>Median rent (houses) &#8211; $450 per week<br \/>\nYOY change \u2013 -5.3%<br \/>\nMedian rent (apartments) &#8211; $425 per week<br \/>\nYOY change \u2013 -5.6%<\/p>\n<p><strong>Hobart<\/strong><\/p>\n<p>Median rent (houses) &#8211; $350 per week<br \/>\nYOY change \u2013 6.1%<br \/>\nMedian rent (apartments) &#8211; $280 per week<br \/>\nYOY change \u2013 0%<\/p>\n<p><strong>Darwin<\/strong><\/p>\n<p>Median rent (houses) &#8211; $630 per week<br \/>\nYOY change \u2013 -3.1%<br \/>\nMedian rent (apartments) &#8211; $520 per week<br \/>\nYOY change \u2013 -5.5%<\/p>\n<p><strong>Canberra<\/strong><\/p>\n<p>Median rent (houses) &#8211; $480 per week<br \/>\nYOY change \u2013 0%<br \/>\nMedian rent (apartments) &#8211; $390 per week<br \/>\nYOY change \u2013 -2.5%<\/p>\n<p>While investor activity in Sydney is still strong right now, our company has seen an increase in investors from Sydney looking at Brisbane, the Gold Coast and some regional Queensland markets, including the Sunshine Coast for better investment opportunities.<\/p>\n<p>Yields are definitely better at 4.5% (houses) and 5.4% (apartments) across Brisbane\/Gold Coast combined and there is great opportunity for capital gains in South-East Queensland over the next few years, so it\u2019s not a bad move.<\/p>\n<p>But Sydneysiders shouldn\u2019t give up on Sydney just because yields are a bit lower these days.<\/p>\n<p><strong>I have always advocated investing in an area you can easily drive past.<\/strong><\/p>\n<p>If you live in Sydney, it\u2019s a good idea to invest in Sydney because your market knowledge is better and you\u2019ll have the sleep-at-night factor of being physically close to your investment asset in case of an emergency or major repair issues.<\/p>\n<p>The bottom line is focus on capital growth.<\/p>\n<p>Think of yields as a means of helping you pay the mortgage and accept the likelihood of a shortfall in weekly costs if you\u2019re purchasing in a major capital city like Sydney.<\/p>\n<p>The gains to be had over the long term are far more important!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In his recent column in\u00a0Switzer, John McGrath discusses the decline in rental yields across Australian capital cities. Here&#8217;s what he said: One of the trends likely to play a role in ultimately slowing Sydney\u2019s market down is declining rental yields. This will start to impact&#8230;<\/p>\n","protected":false},"author":176692473,"featured_media":4549,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[13],"tags":[],"class_list":["post-25214","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-latest-story"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Watch out for rental yield falls | John McGrath - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/watch-out-for-rental-yield-falls-john-mcgrath-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Watch out for rental yield falls | John McGrath - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"In his recent column in\u00a0Switzer, John McGrath discusses the decline in rental yields across Australian capital cities. Here&#8217;s what he said: One of the trends likely to play a role in ultimately slowing Sydney\u2019s market down is declining rental yields. 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