Is 2013 the year of the property investor?: Stewart Bunn
2013 has been hailed as ‘the year of the property investor’ because interest rates are now below rental yields in many areas, and attracting investment.
Rents are predicted to keep pace with an anticipated lift in house prices of 3.5% according to one survey, depending on location. Western Australia is expected to produce the strongest gains.
There is relatively measured growth in the rental market. Over the 12 months to April 2013, capital city rental rates increased by 3.5% for houses and 3.3% for units.
Across all capital cities, the weekly median rent for a house is $474 per week and $440 per week for a unit.
Gross rental yields currently sit at 4.3% – ranging from 4.25% for houses in Melbourne to 6.22% for units in Darwin, compared to currently achievable 4.59% fixed rates.
NSW and Western Australia are considered the most expensive rental markets, although there is high demand for units in Sydney, Melbourne and Perth, driving up median weekly asking rents in the March quarter.
Upward pressure on rents is set to continue in Sydney, Perth and Darwin due to an ongoing chronic shortage of housing.
According to our members, the rental market in Australia will continue to be relatively tight, with little room for movement.
Vacancy rates are expected to remain flat or trend downwards due to ongoing strong demand tightening the market even further.
This is exacerbated by the improved affordability of houses in comparison to weekly rental prices.
VACANCY RATES – NEXT SIX MONTHS
National | NSW | Vic | Qld | WA | SA/NT | Tas | |
Flat | 46% | 44% | 27% | 50% | 57% | 60% | 100% |
Downwards | 38% | 37% | 55% | 43% | 43% | 10% | - |
Upwards | 16% | 19% | 18% | 7% | - | 30% | - |
The ongoing tight rental markets across Australia will continue to place upward pressure on weekly rental prices.
However, given the strong affordability of housing at the moment, there is not much more the market can bear in terms of weekly rental prices.
Queensland and Western Australia lead the anticipated weekly rental price increases, followed by NSW and then Victoria and then South Australia.
WEEKLY RENTALS – NEXT SIX MONTHS
National | NSW | Vic | Qld | WA | SA/NT | Tas | |
Flat | 35% | 33% | 41% | 27% | 14% | 60% | 100% |
Downwards | 11% | 11% | 17% | - | 14% | 20% | - |
Upwards | 54% | 56% | 42% | 73% | 72% | 20% | - |
Stewart Bunn is national communications manager for First National Real Estate. This article first appeaed on firstnationalnews.com.
