Brisbane Property Rents Rising

Brisbane Property Rents to soar as rising interest rates bite

With the Reserve bank of Australia continuing to tighten interest rates, it is starting to become good news for property investors. With the supply of new dwellings way below the demand plus the rise in interest rates resulting in a lot of property buyers missing out on being eligible to borrow enough to buy properties, the rents will be heading in one direction only… on the way UP

*Note: these figures are for the 12-month periods leading to March 2009 and March 2010.

*Note: these figures are for the 12-month periods leading to March 2009 and March 2010.

Rental prices in Brisbane have been tipped to soar by up to eight per cent before the end of the year.

Rising interest rates and tightening vacancy rates look set to combine to increase pressure on tenants, according to the latest Australian Property Monitors quarterly figures.

The report has predicted median weekly house rents in the city will rise nearly $40 from the current median price of $365.

Rental costs for units are tipped to rise seven per cent from $345 to $370 by the end of the year.

The river city recorded the weakest rental growth in eight years in 2009, with median house rents hovering between $350 and $360.

“The factors that kept a lid on rents in most cities in 2009 are no longer apparent,” APM economist Matthew Bell said.

“Job security and income growth has returned as unemployment peaked at 5.8 per cent, much lower than was expected this time last year

“The recent series of interest rates rises mean that landlords have to factor five rate increases since September into their costs, some of which is likely to be translated into rent increases.

“Long term, Brisbane house rents have gone up over the past five years by just under seven per cent. Given this is a year coming off flat rents, [prices] will reach longer term trend levels and probably a bit above.”

The rental price hike will serve as another barrier to potential first-home buyers after the end of the first-home owner’s boost in December.

While most Brisbane tenants received a reprieve from price hikes last year, suburbs west of Brisbane and in the inner-city saw rents skyrocket between 12 and 20 per cent.

The median rent in the inner-city suburbs of Newstead and Woolloongabba both experienced rises of more than 13 per cent, with rents increasing to $680 and $450 respectively.

“Although rents should rise across the board, an improving employment outlook will mean more income for renters to be able to cope with and agree to these increases in 2010,” Mr Bell said.

But Queensland Council of Social Service president Karyn Walsh said the rental trap was of most concern, with a 17 per cent rise in weekly rental costs nationwide since 2000.

She said Brisbane suburbs with traditionally low rental prices had suddenly surged, forcing families to move further away from the city and vital health and education services.

“The worst case scenario is that they end up sleeping in cars or with friends and relatives until they can find other accommodation,” Ms Walsh said.

Mr Bell said Sydney rents are likely to increase by at least double last year’s rate to approach the $500 per week for houses, continuing to outstrip other eastern capitals, while the median house rent in Melbourne is expected to rise by five to seven per cent.

“Australia is suffering from a relatively low supply of new properties being built which provides no relief for the current low vacancy rates, particularly in the major rental markets of Sydney and Melbourne,” he said.

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