Declining residential rental yields suggest caution in the Melbourne market

Dr Andy Krause: 0421852228 Dr Gideon Aschwanden: 0415589047 Researchers from the University of Melbourne have created a system to model and predict house values and rental rates at the individual property level.  The comparison of these two values offers insight into rental yields in the market; an import metric that can be used by buyers, sellers, investors and renters to help make informed choices. Dr Gideon Aschwanden and Dr Andy Krause from the Melbourne School of Design in the Faculty of Architecture, Building and Planning said that rental yields are a critical driver of rental and housing costs and acts as a key indicator for property bubbles. "In this volatile Melbourne property market, buyers want to ensure the safety of their investment. Our recent analysis of property sales and rental returns will better inform investors with location information, helping them to invest their money more securely," said Dr Aschwanden. According to the researchers, rental yields of the property market as a whole need to be properly evaluated as they may be a leading indicator of bubble creation. By understanding changes in yields safety measures can be enacted that may help prevent or dampen a sudden collapse in the market.