WA rental growth expectations hold steady: NAB

Investors in Western Australia will be buoyed by expectations of rental growth of 6.3% over the next two years, compared with a more modest national growth forecast, according to NAB’s latest quarterly residential survey.

While WA rental growth forecasts to June 2013 have held steady over the three months since the last survey, nationwide rent expectations have fallen from 5.2% in the March quarter, currently sitting at 4.4%.

The resource-rich state has also held steady while forecasts for NSW have dropped from around 6% in March 2011 to 4.6% in June.

Rental growth expectations in Victoria are weakest at 3.7%, but they have strengthened in Queensland from 2.5% in the March quarter to 4% in June and also in South Australian and the Northern Territory, where they have risen from 2.9% to 4.2% over the same period.

Over the last quarter rental growth was positive in all states, with the biggest increases recorded in SA/NT (2.4%), WA (2%) and NSW (1.5%). Rental growth in Queensland was slowest at 0.4%.

For the next 12 months, expectations for rents have been revised down slightly, with the latest survey pointing to nationwide rental increases of 3.1% over the next year, compared with 3.5% in the March quarter survey. Rental expectations were downgraded in all states to June 2012.

According to the survey, Australian resident investors make up more than quarter (28%) of the market, down from 34% in March.

The market continues to be dominated by owner-occupiers, who now account for 46% of total demand compared with 42% in March.

First home buyers account for 17% of the market, with those buying new developments most active in NSW (24%) and least active in Queensland (10%). The share of overseas buyers increased slightly to 7%, up from 6% in March.

“These trends are expected to stay broadly unchanged over the next 12 months,” the NAB survey says.