Will rents keep rising?
Rents are rising across Australia and units are outpacing houses as the preferred rental property.
In fact, rents in units in major cities like Sydney and Melbourne have jumped more than rents in houses.
A recent newspaper article reported that rents in apartments in Southbank and Docklands in Melbourne have risen more than 29 per cent over the past 12 months.
Property market research firm CoreLogic said the uptrend is expected to continue as demand for rental accommodation increases.
According to Tim Lawless, CoreLogic research director, almost all regions and major cities in Australia are showing record high rents.
This trend is being driven by higher demand as migration returns to Australia. International students and tourists plus more people returning to the cities (after a temporary relocation to regional areas the past two years) are the main drivers of demand for rental properties.
At the same time, the lack of supply of rental properties is adding to the tight availability.
In a media statement, Lawless said, “We’re seeing vacancy rates at record lows across Australia and rents are rising well above income levels.”
From Wealthi’s perspective, we have written and talked about rent rises and demand for rental properties in previous articles and property market forecasts.
In one of his media interviews about the property market and rising interest rates, Wealthi co-founder Peter Esho highlighted one of the upsides of rising rates for property investors. Compared to home owners who may have taken huge amount of mortgage, “owner-occupiers will fare worse than investors because the increase in rents offsets the rising interest cost for landlords.”
And this is becoming more obvious these days with higher rents translating to higher income and revenue stream for property investors
CoreLogic’s monthly housing report for June 2022 confirmed the strength and uptrend in the rental market. According to the report:
· Rental value growth remains high across Australian dwellings. Rent values increased a further 1.0% in May, taking rents 9.3% higher over the year.
· Through May, Australian gross rent yields rose to 3.3%, up from a recent low of 3.21% through January this year. Since the end of 2021, gross rent yields in Sydney have lifted 17 basis points, and 12 basis points in Melbourne.
If you would like to discuss the Australian property market in more detail, reach out to the team to organise a time to have a conversation about how Wealthi can help you build a successful property portfolio.