Rents surge in Hobart as yields slump in Sydney

Rents surge in Hobart as yields slump in Sydney

Australia’s eight capital city rental markets have posted very different results over the March quarter.

Domain has reported that while Sydney tenants paid the highest rents, Hobart tenants experienced the fastest growth in rents over the year (see tables below).

In terms of gross yields, Sydney landlords had the worst return over the past year, while Darwin landlords had the best (see tables below).

Here are some of the highlights for each of the capital cities:


  • Rents were identical for houses and units ($550)
  • Sydney had the lowest yields of any capital city (3.11 per cent for houses, 3.85 per cent for units)


  • Unit rents jumped by 2.5 per cent over the quarter
  • Melbourne suffered the biggest annual decline in yields of any capital city (5.9 per cent for houses, 1.5 per cent for units)


  • Rents declined over the year for both houses (1.2 per cent) and units (1.3 per cent)
  • Brisbane ranked third for house yields (4.61 per cent) among the capital cities


  • Perth had the lowest house rents ($355) and unit rents ($300) among the capital cities
  • Yields rose over the quarter for both houses (1.2 per cent) and units (2.0 per cent)


  • Adelaide posted quarterly and annual rental increases for both houses (1.4 and 4.2 per cent) and units (1.7 and 1.7 per cent)
  • Yields fell over the year for both houses (1.3 per cent) and units (0.4 per cent)


  • Rents skyrocketed over the year for both houses (15.1 per cent) and units (14.8 per cent)
  • Yields rose over the quarter for both houses (1.5 per cent) and units (4.8 per cent)


  • Rents surged over the year for both houses (6.0 per cent) and units (5.9 per cent)
  • Canberra ranked second for unit yields (5.84 per cent) among the capital cities


  • Darwin had the second-highest house rents ($530) among the capital cities
  • Darwin ranked first for unit yields (5.89 per cent) among the capital cities


Median weekly asking rents – houses

City Rent Quarterly change Annual change
Sydney $550 0.0% 0.0%
Melbourne $430 1.2% 2.4%
Brisbane $400 0.0% -1.2%
Perth $355 1.4% -4.1%
Adelaide $375 1.4% 4.2%
Hobart $420 6.3% 15.1%
Canberra $530 -1.9% 6.0%
Darwin $530 -3.6% -3.6%

Median weekly asking rents – units

City Rent Quarterly change Annual change
Sydney $550 0.9% 3.8%
Melbourne $410 2.5% 3.8%
Brisbane $375 1.4% -1.3%
Perth $300 0.0% 0.0%
Adelaide $300 1.7% 1.7%
Hobart $350 2.9% 14.8%
Canberra $450 4.7% 5.9%
Darwin $410 -1.2% -2.4%

Gross yields – houses

City Yield Quarterly change Annual change
Sydney 3.11% 0.8% -3.0%
Melbourne 3.14% 0.5% -5.9%
Brisbane 4.61% 0.6% -1.9%
Perth 4.17% 1.2% -0.5%
Adelaide 4.50% 0.1% -1.3%
Hobart 5.15% 1.5% -3.8%
Canberra 4.28% -0.1% -3.9%
Darwin 5.06% 1.4% -0.2%

Gross yields – houses

City Yield Quarterly change Annual change
Sydney 3.85% 1.3% -1.4%
Melbourne 4.47% 3.2% -1.5%
Brisbane 5.06% 2.8% 1.3%
Perth 4.52% 2.0% 1.5%
Adelaide 5.16% 1.1% -0.4%
Hobart 5.52% 4.8% 0.0%
Canberra 5.84% 3.2% 4.4%
Darwin 5.89% 3.0% 6.7%

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What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.

Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

How much deposit will I need to buy a house?

A deposit of 20 per cent or more is ideal as it’s typically the amount a lender sees as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from, with some likely to offer up a lower interest rate as a reward. Additionally, a deposit of over 20 per cent usually eliminates the need for lender’s mortgage insurance (LMI) which can add thousands to the cost of buying your home.

While you can get a loan with as little as 5 per cent deposit, it’s definitely not the most advisable way to enter the home loan market. Banks view people with low deposits as ‘high risk’ and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in LMI as it works on a sliding scale dependent on your deposit size.

How much debt is too much?

A home loan is considered to be too large when the monthly repayments exceed 30 per cent of your pre-tax income. Anything over this threshold is officially known as ‘mortgage stress’ – and for good reason – it can seriously affect your lifestyle and your actual stress levels.

The best way to avoid mortgage stress is by factoring in a sizeable buffer of at least 2 – 3 per cent. If this then tips you over into the mortgage stress category, then it’s likely you’re taking on too much debt.

If you’re wondering if this kind of buffer is really necessary, consider this: historically, the average interest rate is around 7 per cent, so the chances of your 30 year loan spending half of its time above this rate is entirely plausible – and that’s before you’ve even factored in any of life’s emergencies such as the loss of one income or the arrival of a new family member.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

I have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.