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Why many parts of Australia are a landlord's market right now.

Blog Image | Why many parts of Australia are a landlord's market right now. | Green Finance Group
Blog Image | Why many parts of Australia are a landlord's market right now. | Green Finance Group

Australia, A Landlord's Market..

The Green Team are seeing a consistent stream of finance enquiries on behalf of investors, new and experienced, looking to take advantage of current favourable market conditions to grow or start their residential investment property portfolios.

The latest RBA cash rate increase in July and ongoing speculation as to the actual ceiling of rate rises to come is certainly a topic of consideration but doesn’t seem to be dampening investor enquiry level just yet as high demand for rentals and subsequent rental rates remains strong.

The national vacancy rate remained at 1% in June, the same as the previous month, despite a slight increase in vacant rental properties. SQM Research reported that there were 37,049 rental vacancies in June, compared to 36,478 the month before.

While that was not enough to push the national vacancy rate higher, the rate did increase in four of Australia’s eight capital cities. The current vacancy rate is extraordinarily low and has caused some politicians and media outlets to speak of a rental crisis.

SQM believes "it's possible we could be near the peak in the national rental crisis", which would suggest vacancy rates might start trending upwards at some point. In the meantime, with rental accommodation at a premium, tenants are competing hard, which is causing rents to rise rapidly.

Rental rates are surging and have now reached record levels in every capital city except Darwin, according to new data from CoreLogic. Between the June quarters of 2021 and 2022, the median rent for an Australian rental property rose 9.5%.

That is the fastest rate of growth since 2008, when rental demand was supported by record levels of international migration, according to CoreLogic.

"The current surge in rental demand has occurred largely in the absence of overseas migration and instead has been driven by a decrease in the average household size over the covid period."

Since the start of the pandemic in March 2020, house rents have increased at nearly twice the rate of unit rents. However, that gap narrowed somewhat in the year to June 2022, with unit rents growing faster than house rents (10.0% vs 9.4%).

Regional rents also grew faster than capital city rents during that 12-month period (10.8% v 9.1%). The market should continue to favour investors until there’s a meaningful increase in vacancy rates.

If investing in property is on your short-term horizon, be sure to start the process by ascertaining your borrowing capacity and subsequent loan options and repayment costs. Your finance broker will be in the best position to provide you with options from a range of banks or lenders, not just one or two, and help you to make an informed decision for your situation.

If you have any questions regarding property finance, and your lending ability or are

ready to purchase your next investment,

Please don't hesitate to contact your Property Strategist.


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