Australian Property Monitors (APM) figures show the rental market in the June 2010 quarter continues with low vacancy rates, but limited rental growth. APM predicts that as leases begin to expire, a strong labour market will mean rental prices will begin to increase towards the end of the year.
“Gross rental yields have fallen in all capitals in the 12-months to June as property price growth outstripped rental growth for the majority of the period. In the June quarter, rental yields increased in most capitals”, APM says.
“With the outlook for price growth softening for the remainder of 2010 and with rents expected to return to growth, yields are expected to start rising slightly for the remainder 2010.”
APM says that even though vacancy rates remain low and prices have grown over the past year, landlords may not be as willing to impose rental increases on tenants at a time of low consumer sentiment.
“It’s possible that landlords have recognised that renters may not have been as willing to agree to rental increases in the June quarter as consumer spending remained weak and worries over the world’s major economies spilled over into the local share market.”
APM points out that the slew of home buying in 2009 is still having an effect on asking rents in most capital cities. However, strong economic data and employment should help increase rents over the second half of the year.
“The alternative option for renters of moving into ownership has become less attractive as property prices have risen significantly in most cities in the last year and interest rates have risen a long way off their lows.”
“As leases expire and are renewed however, it is expected that a robust employment market, rising incomes and low vacancy rates in most capitals will start seeing asking rents increasing again”