Sydney rental market records 3rd flat quarter, rent rises predicted for 2010
For the third consecutive quarter, rental growth has remained flat. This is however predicted to change soon with rental growth forcast for 2010. Despite the flat rental market, demand for the Sydney real estate market remains strong; yields are still high and there is a net undersupply of dwelling in Sydney. Property investors are beginning to return to the Sydney housing market, lured by high yields, a return of positive sentiment, a strong economic recovery and historically low interest rates.
Property Investors are seeing opportunities in the Sydney market for several reasons;low interest rates, a recovering economy and house prices starting to increase, suggesting that the property market may have bottomed out last year. For the first time in a long time there are opportunities for positively geared property in the Sydney real estate market. The drop in the first home owners grant has reduced the demand for property in this segment of the market; however investors are more than making up for this, returning to the property market on mass.
Median Weekly Rents Sydney *
| |
Units |
Houses |
Unit Yields |
House Yields |
| January 09 |
$420 |
$460 |
5.18% |
4.55% |
| January 10 |
$420 |
$460 |
5.18% |
4.55%
|
The current average weekly rent for Sydney houses stands at $460 per week (even with a year ago). The average weekly rent for units is currently $420 per week (even from January last year). This gives an average gross yield for houses and units of 4.55% and 5.18% respectively.
The reduction of the first home owners grant at the end of December is a significant factor in the rental market. This reduction of the grant in turn reduces the attractiveness of buying over renting.
The increase in interest rates also dampens the first home owners segment of the market, forcing many to remains as tenants till they can more comfortably afford to purchase their first property.
The real driving force for property over the coming year(s) will be migration. The government has adopted a strong migration policy, aiming to increase skilled migrants dramatically over the coming years. Short and long term migration rates along with high birth rates continue to push the population along strongly, creating a continued gap between dwelling supply and demand. This population growth will assist in pushing rental prices up.
* Data courtesy of APM
JRS - Investment property management experts.