Hard on the heels of my last post about Australia’s housing shortage/surplus comes some information^ on Australia’s top 25 Residential property rental increases as measured by council areas. The highest median rent in Australia belongs to…
Yes, the median rent in Port Hedland ($1,900 a week – that’s $98,800 a year people…) has officially topped Mosman in New South Wales ($1,800 a week). Coming in at a close number 3 is Roeburne, at $1,600 per week.
The ‘usuals’ are still high in the list :
- $1,000 a week in Cottesloe (#8)
- $980 a week in Nedlands (#9)
- $900 a week in Claremont (#10)
- $863 a week in East Fremantle (#14)
- $810 a week in Broome (#17)
- $800 a week in Subiaco (#18)
- $795 in Perth (#21)
- $795 in Mosman Park (#23)
So Western Australia has 10 of the 25 most expensive rental areas in Australia. REIWA’s website lists the median Perth weekly rent as being $420, so some people are paying a very high relative price for the privlege of living in Port Hedland.
It becomes rather fascinating to look at the yields# being obtained by investors who are renting their properties in these areas. When looking at housing figures we must always keep in mind the total individuality of each home, and the idea that “averages” can be skewed by considering medium / median/ stratified sampling and any one of the other statistical tools that attempt to make a scattered dataset more useful. The figures below are based on the median house price as shown on the REIWA website today. Other methods of deriving “average” house prices will result in quite different figures – but we’ve got to start somewhere, i suppose.
- Port Hedland*
- 3.0% Cottesloe $1,711 500
- 3.3% Nedlands $1,535,000
- 3.6% Claremont $1,300,000
- 4.5% East Fremantle $1,000,000
- 3.5% Subiaco $1,175,000
- 5.9% Perth$700,000
- 3.7% Mosman Park $1,122,500
* Valuations in regional centres can be quite tricky. According to REIWA, Port Hedland has 3,014 occupied dwellings, of which 58% are being rented. The median house price is shown as $750,000. The averge income is shown as $98,228 and the weekly rent as $113. When clicking on the most recent data button, Port Hedland is shown as having a rental of $1,725 based on 42 properties. The 10 year growth rate for housing in Port Hedland is listed as 17.2%pa while the 5 year growth rate is shown as 16.9%. As you can surmise, some individual suburbs can be very difficult to work out an average estimate that is even mildly reliable.
# Please also keep in mind that my yield calculations are materially flawed in so many ways. The figures shown may not correlate to equal measurement periods, and the average rental property price may vary significantly fom the house prices i have used.
These figures are also “gross” as they do not account for holding costs of a rental property. To gain some idea of this, there would be costs such as Agent fees, landlord’s insurance, water and council rates, land tax, accounting fees, maintenance and repairs. Again, each home and suburb will have different input costs so we could just assume that ongoing costs amount to something like 1% to 2% of the property value. If we apply that rule-of-thumb then we are looking at investment yields from rent of between 1% and 4.9%. When looked at in this context, the rents suddenly cease to look so extravagant. At the levels shown, they aren’t really a reflection of the risk in holding such a large, illiquid single asset.
Notes and Further Reading:
^ The information was spotted via an update from the RP Data people, who maintain a massive databank on all things property in Australia. http://pages.e.rpdata.com/Most-expensive-rents-arent-always-in-the-capital-cities/