I bought some houses in the western suburbs of Sydney in 2007 and 2008. I have personally found that in this area around the time we were buying rents and rental returns had been flat and just starting to rise at about 4% to 5%. When we bought we bought at about 15% below the current market price at the time. That simple effect brought our rental yeilds up. Since then we have increased our rents about 35% (about 10% to 12% per year), whilst property prices have gone up about 25% and then fallen about 10%. So at the moment you can easily find a rental property with yeilds 6% and above in western Sydney. We are actually achieving 8% to 9% based on our purchase prices.
I think you will find in general that probably up to 2006 rents had been pretty flat with only small rises of about 2% per year, but since about 2007 rents have started to catch up to property prices, rising 10%+ per year. You will also find that unless the supply of new properties increases, rents will continue to perform well over the next few years in Australia.
Generally, when there is a slowdown in property prices and existing property investors start selling, the demand for buying properties will decrease, and less new properties will be built (as it becomes more risky for developers and builders to keep developing new houses) and thus the supply of rental properties on the market will dry up. This will cause rents to increase quickly. Once the property market picks up again, investors will come back into play and the risk is reduced for developers and builders to build new houses. This provides an influx of rental properties now avaiable and will reduce the demand for rents to keep increasing at such a dramatic rate, and prices will start once again rising much faster than rents.