Tuesday 16 August 2022

Why Rental Prices Are Rising So Fast

If you are looking for a property to rent at present, you will be confronted by a lack of stock and rapidly rising prices. Conversely, if you own an investment property, it is becoming more and more of a landlord’s market, and you will be seeing your return-on-investment flourish. 

So, what are the chief causes of rising rent? Primarily, supply is outweighing demand. A considerable number of would-be first home buyers have been priced out of the market recently and heavily affected by the rising interest rates. And sadly in some cases homeowners who locked in a property at the historically low interest rates, are no longer comfortably able to service that loan, inducing them to rent until interest rates stabilise.

Airbnb listings as proportion of rental dwellings in Sydney Photo: supplied

Another factor contributing to the short supply of rental properties is the Airbnb effect that has attracted many long-term rental properties to transition to short term rentals. Although the increased maintenance required to sustain an Airbnb property is not attractive to all investors, there are still enough out there who have withdrawn their long-term rentals, creating an even greater shortage in supply. 

Add to this, the number of homes that were purchased by first home buyers (see previous blog here) over the last ten years, assisted by increasing state and federal government incentives, has left the rental market under even more pressure from a supply perspective.

There has also been a resurgence of international travellers and students who want to live medium term in Australia. Many wealthy parents of international students are once again seeking high quality rental properties in areas that are well connected transport wise, have multiple local amenities and are reasonably close to universities placing further strain on supply (see previous blog here).

Finally, with the escalating prices of the Sydney real estate market across recent years, many landlords chose to sell their rental properties to homebuyers, and capitalise on the record high property prices, further draining the market of rental property. 

All these factors combined have affected the market considerably, meaning that what is out there now is snapped up quicker than ever due to high demand and scarcity of product. However, if you are an existing investor, looking to invest in your first rental property or add to your existing property portfolio, things are looking pretty darn good. 

Cramer have a large selection of apartments that each bear the ideal investment property fundamentals – incredible location in some of Sydney’s most popular suburbs, award-winning architects, impeccable design, premium build quality aimed at longevity, fabulous finishes, great development facilities and some of the best restaurants, cafes, bars and boutique shopping in Sydney. See below for intrinsically rentable apartments…

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