Sur­prise, sur­prise, we’re go­ing up

Herald Sun - Property - - Apartments -

back of the first home owner boost at the end of the month and in­tense me­dia spec­u­la­tion of im­mi­nent in­ter­est rate rises con­trib­uted to the slow­down.

We an­tic­i­pate that in com­ing months slower growth will con­tinue.

The wind­ing back of first-home in­cen­tives and in­ter­est rate rises of 2 per cent over the next 18 months will re­sult in a de­cline in home loan af­ford­abil­ity and peo­ple re­main­ing in the rental mar­ket.

This is good news for prop­erty in­vestors be­cause rental yields and rental rates have been fall­ing.

Mel­bourne house rents peaked at $391 a week in Fe­bru­ary this year and fell to $373 a week in Septem­ber, a 4.5 per cent slide.

Unit rents have fallen 2.9 per cent from $353 a week to $343 a week.

De­spite the slow­down in growth in Septem­ber, house rents fell $9 a week and unit rents fell $6 a week.

The dou­ble whammy of ris­ing val­ues and fall­ing rents has eroded yields, which peaked at 4.5 per cent for houses and 5.0 per cent for units and now sit at 3.9 per cent and 4.5 per cent re­spec­tively.

We an­tic­i­pate that in com­ing months an al­ready tight rental mar­ket cou­pled with a con­tin­u­ing un­der­sup­ply of new dwellings will re­sult in rental in­creases and yield im­prove­ment.

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