With dwelling prices rising we might expect to see rental vacancies increasing and yields declining. Historically speaking, however, Sydney's vacancy rate remains low despite pockets of forthcoming oversupply. RBA again:
"Despite the activity and housing price inflation in the Sydney and Melbourne property markets, rental yields have not declined to a significant extent and vacancy rates in these cities remain fairly low."
Household financial stress?
Generally 90 day+ loan arrears at now at very low levels at only 0.5 percent, but there are some indicators of household financial stress in Victoria. Back to the RBA:
Data on securitised housing loans show that the share that are 90 days or more past due has declined over the year for most states, coinciding with lower interest rates and rising housing prices. In Victoria, however, loan performance has deteriorated slightly."
The RBA notes instances of mortgage stress and arrears in "outer west and north Melbourne".
Interest rate rises?