The Australian rental market has experienced a significant shift driven by various demand and supply factors. The increase in international arrivals have boosted demand, while rising interest rates and a decrease in building activity have affected the supply of rentals.
These dynamics have led to a dislocated market, creating challenges for renters and landlords alike.
The renewed influx of students and migrants into the country are putting extra pressure on the limited supply of rental properties, together with people that are returning back to the capital cities after leaving during the pandemic. This increased demand is leaving many struggling to secure a place to call home.
In February, over 140,000 foreign students returned to Australia and the number of students arriving on temporary student visas is slowly returning to pre-pandemic levels. While this is good news for universities, as well as employers that rely on students such as hospitality, it is also good news for investors.
With the rental market that is currently experiencing a surge in demand, enquiries per listing went up by over 31%. However, this growth in demand is not being matched by an increase in supply, with rental listings down by over 26% compared to last year.
Australia’s rental crisis has reached its peak in regional areas as well, prompting advice for tenants to consider moving out of the city. According to SQM Research, national residential property rental vacancy rates rose to 1.1% in March 2023, with regional rental vacancy rates experiencing a sharp increase.
Challenges for renters were also being exacerbated by the fact that higher interest rates had reduced borrowing capacities. This is making it harder for renters to transition into first home buyers and more difficult for investors to purchase properties, restricting rental supply even further.
Rents are now rising at their fastest pace ever recorded, driven by the imbalance in supply and demand. As of March 2023, rental prices in Australia’s eight capital cities have increased by 11.5% over the year and a staggering 23.4% since the pandemic’s onset, according to CoreLogic data.
While unit rents continue to see higher rates of quarterly growth than houses, the gap between the two has narrowed. This trend could potentially be attributed to the return of overseas migration, which may be diverting additional demand to the high-density housing market.
This has sharply boosted gross rental unit yields to the highest since 2014.
Economic researcher, Cameron Kusher suggested the most effective way to alleviate rental pressures in the short-term, was to encourage more investment in housing.
He said:
“The quickest solution is to get more investors to buy residential properties that already exist and make them available for rent. The best way to increase supply in the long term was to build more homes, specifically for rent.”
If you have been thinking of leasing out your property, now is a great time to have your property appraised with the heightened demand for rental properties on the Central Coast.
Our property management team would love to help you lease your property in record time, ensuring you get the most out of your investment straight away.
Research revealed that almost one in three renters have taken extreme measures to secure a rental property, including offering to pay several months of rent upfront and pay above the rental asking price.
If your managing agent is not taking advantage of the current rental market by proactively assessing & updating your rental income both when re-signing leases with existing tenants and when re-letting your property, your investment property is not achieving its true rental income.
Talk to one of our agents and let us do an income audit review for you and provide you with the necessary insights of your property in order for you to make informed decisions about your investment today.
Not happy with your current rental income, but worried that the process of changing agents is too time consuming and not worthwhile for the extra rent?
Let our property management team do the whole transfer for you and we assure you that no communication between you and your former agency will be required. We will take care of all communications and all that are needed to ensure an effortless an effortless and awkward-less transfer!
After something more from your property manager? We get it.
Submit your details below and we’ll get in contact with you shortly.
Despite rising interest rates and a softening property market, we’re seeing a huge buyer demand and strong results for sellers due to the historically low volumes of homes currently available for sale. While the current climate may not offer the same once-in-a-lifetime opportunities seen during the pandemic, it’s not all … Read more
Whether you’re looking to buy, sell, upsize, downsize, or invest, 2023 is the year to take action if you’re keen to make a move! Make the best move you could make in property by taking advantage of the current property market conditions. Read our Property Market Update for March to find out why… Property market is … Read more