Strong rental rises drive positive gearing opportunities

Asking rents on Australian residential properties increased dramatically in the year to March and rental yields are now near to or surpassing home loan interest rates, according to Australian Property Monitors (APM).

The valuer’s Rental Series released yesterday showed asking rents levelled off in the first quarter of 2009 as lower interest rates eased pressure on landlords to seek higher rental returns. Year-on-year growth however has been strong, and is expected to continue.

Darwin median asking rents for houses rose the most over the year, increasing by 17.6 per cent to $500 per week. Sydney and Perth houses were not far behind.

Matthew Bell, APM economist, said “rental yields are now approaching or exceeding mortgage rates and in some areas positive gearing is a real possibility”.

These areas include Perth, Melbourne, Sydney and Darwin for example, where gross annual rental yields all sit above 8 per cent.