SLUMPING home prices and poor housing affordability helped lift quarterly rental yields for the first time in nine months, raising hopes for an improved real estate market this year.
National median weekly rent for houses rose 1.1 per cent in the final quarter of last year, while rents for apartments and units rose 1.4 per cent, according to Fairfax-owned Australian Property Monitors. Both measures had been flat in the previous two quarters.
''Increasing competition for properties, particularly from homebuyers unable or unwilling to enter the property market, has resulted in rising rental prices over the December quarter for both houses and units,'' an APM senior economist Andrew Wilson said.
Australian housing is considered among the least affordable by global standards. The median home price stood at $450,000 in November.
The quarterly rise in rents - typically a sign of a robust property market - masks unevenness across the major capital cities, with house rents in Sydney increasing 4.2 per cent over 2011, while falling in Melbourne by 1.4 per cent. For the year, unit rents rose 4.5 per cent in Sydney and 2.9 per cent in Melbourne.
''It has been a much less competitive rental market in Melbourne than in other capital cities,'' Mr Wilson said. A wave of new inner city unit construction, expected to be brought on to the Melbourne market over the coming year, will likely put a cap on rents in the city.
Mr Wilson said Sydney rents may soften slightly this year after a surge of first home buying activity in the fourth quarter of 2011. First home buyers rushed to take advantage of the NSW stamp duty concession for first home buyers which expired at the end of December.
''The fundamentals of the property market are starting to reassert themselves,'' Mr Wilson said.
Yet, economists remain divided about how rapidly, if at all, the housing market will rebound on lower rates, given the European debt crisis clouding the borrowing and spending decisions of Australians.