Sydney Property Rentals- On the way Up

Sydney property rentals are forecast to be increase by an average of 5.8% a year over the next three years.

After a weak 2009 when Sydney properties rents only increased marginally, investors can hit the ground running in 2010 with strong predictions that rents will keep rising around Australia.

With the Reserve bank of Australia (RBA) having increased interest rates 4 times in the last 6 meetings and the interest rates are predicted to continue climbing. This can be good news for investors as most new home buyers have been forced out of the market to buy homes as they cannot afford to get a loan anymore. With bank interest rates having increased above or inline with the RBA rates increases, however their loan serviceability rates have risen much higher as banks tighten the lending rules. With maximum borrowings on new properties loan reduced to a maximum of 90% LVR, new home owners have to save a minimum of 10% deposit which can be quite difficult for some.

From Property Investors perspective as new home lending is further tightened and interest rates keep rising, meaning new home owners cannot afford to buy their own homes resulting in then having to continue renting for longer. Real Estate investors can hike rents as there is a continous strong demand for rental properties, maximising their rental returns on investment properties.

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Rental growth is expected to be strongest in Sydney with annual rent increases of 7.1%.

Rental growth is also expected to be strong in Melbourne at 5.6% and Brisbane property rental growth at 5.0%

With the RBA on a interest rates tightening cycle the rental yields for property investors are looking bright.

In 2009 Apartments in Penrith suburb of Sydney had rental growth of 30% but houses in Rosebay in the eastern suburbs of Sydney increased by a whopping 58.3%  (see table below). Apartments in West End suburb of  Brisbane was the standout for Brisbane Units with rental growth of approx 40%.

It will be interesting to see the rental growth increases for the March 2o1o period…

Property rental ggraph - RP Data


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