A RETURN TO GOOD YIELDS?

A return to capital growth is now taking place as weekly rental rates start to level, according to figures from property research firm RP Data.

The company?s national research director Tim Lawless commented: "Rental rates across Australia have powered ahead over the last three years, providing the best gross rental yields investors have seen for a long time.

"We are now seeing growth rates for weekly rents start to level due to decreasing rental affordability which is causing many renters to consider buying a home instead of renting.

Lawless said gross rental yields are likely to peak over the coming months suggesting that now may be an ideal time for investors to become active.

Referring to housing stock, Lawless said units are continuing to outperform houses. During the first four months of 2009 the value of units increased by 3.3% while house values increased by 2.7%.

Strong performance of the unit market was attributed to several factors. These included the price gap between median house and unit values being over $90,000, making the value proposition of a unit very compelling - and the general proximity of units to cities and transport hubs, making them popular among Generation X and Y buyers.

Monthly Australian capital city home value changes
January (+0.1%)
February (+1%)
March (+0.6%)
April (+1%)

*NB April index results are indicative and may be subject to small revisions.