In the intricate dance of the Australian housing market, April has seen a modest yet significant rise of 0.6% in property values, according to the latest CoreLogic Home Value Index. This consistent upward trajectory, now into its 15th month, has added approximately $4,720 to the national median dwelling value, signaling a buoyant phase that could spell robust returns for property investors, especially those focused on rental incomes.

The vanguard of this growth is Perth, leading with a 2.0% increase, followed by Adelaide and Brisbane with 1.3% and 0.9% respectively. These figures highlight the varied pace of growth across the country, with different cities presenting diverse opportunities for rental property owners. Despite the overall positive momentum, Melbourne slightly retracted by 0.1%, showcasing the market’s dynamic nature.

For landlords, the lower end of the market continues to be where the action is, with more affordable units outperforming their house counterparts in terms of value appreciation. This segment of the market is particularly vibrant, offering rental property owners lucrative opportunities due to high demand and turnover rates.

Regionally, Western Australia outshone other areas with a robust 5.3%increase in dwelling values over the last quarter. This was closely followed by notable rises in Regional South Australia (3.9%) and Regional Queensland (3.2%). These areas represent burgeoning markets where property owners might find growth potential that could outpace some capital cities.

The volume of home sales, while having slowed since its peak last November, remains higher than last year by 8.6%. This sustained interest in purchasing reflects a resilient market that continues to attract investment, underscoring the ongoing opportunities for rental property owners to capitalise on.

Rental yields have notably improved, with the national gross rental yield climbing to 3.75%, the highest since October 2019. This rise is particularly significant in the context of the past few years where yields were compressed by rising property values. The current uplift is a positive sign for landlords, indicating that rental incomes are improving in alignment with property value increases, thus enhancing the investment appeal.

However, it’s important to note that with investor mortgage rates averaging around 6.7%, the cost of borrowing remains a considerable factor in the cash flow calculations for property investments. Landlords need to be astute in managing these costs to maintain profitability.

Looking forward, market dynamics are expected to continue favouring those with properties to let. The ongoing mismatch between supply and demand is likely to keep upward pressure on both property values and rental rates. This scenario presents a double-edged sword in regions with limited new housing developments, where rental demand could intensify further.

For rental property owners, the current market conditions suggest that strategic investments and careful management of property portfolios could yield significant returns. Whether it’s focusing on regions with robust growth prospects like Perth and Adelaide or capitalising on the demand for more affordable rental units, there are abundant opportunities for savvy investors.

Gross rental yields nationally

gross rental yields nationally