Lending Association

Leveraging investment property in the current rental market.

Amongst the news regarding the rate rises and inflation, you have no doubt also been hearing noise about the rising rental market in Australia.

In the last few months, vacancy rates have hit a record low as affordability constraints continue to take a toll on consumers. To combat the increase in pressure, property owners have in turn been increasing rental prices, however, this will soon be hitting it’s peak as Louis Christopher, SQM director stated that with workers returning to capital cities, along with more supply, the large rental increase will cease to continue.  

Although rent prices have hiked in the last few months, it has in turn had a positive effect on rental yields. A recent study from CoreLogic stated that gross rental yields have continue to expand, with rental values rising as housing values depreciate. During the September quarter, national dwelling rental values rose 2.3%, resulting in a rise in dwelling yields of 24 basis points to 3.57%.

The market is expecting the RBA to continue the rate hikes as we approach the end of the year. One thing to note is that the monthly increase in rates by the RBA has impacted property prices across the nation with Core Logic’s latest property report confirming this. As of this month, the combined capital cities home values fell by 4.1%. This recent shift in the market has seen investors take advantage of the lower prices and gross rental yields to bulk up their portfolios and receive good returns.

Now is a great time for investors to consider their options with the drop in property prices and the shift in the rental market as we see the demand of rental properties exceeding supply.

Contact us today to discuss your goals and requirements!

Source: CoreLogic, AFR

Disclaimer: Any information provided herein is of a general nature only. No consideration has been taken into your objectives, needs or financial situation. Before acting on this information you should consider if it is appropriate for your situation.