With the overwhelming majority of Melbourne rental properties already full, and the housing shortage continuing unabated, Victorian investors are not only pretty well guaranteed of finding tenants but can also expect higher rent returns as the market tightens further.
Real Estate Institute of Victoria (REIV) figures show that the number of rental properties available in the market has fallen to 1.4% in January 2010 from 1.5% in December 2009, with properties located in Melbourne’s out ring recording the lowest vacancy rates for the city of less than 1.2%.
“The last time the vacancy rate was above three per cent was in January 2005. Since that time rent increases have grown from three per cent per year to around 10 per cent.” Says Enzo Raimondo, REIV CEO.
“There are two reasons for this, over the past five years the rate of population growth has doubled and the supply of housing has not increased at the same rate.
“Until there is a sustained and ongoing increase in supply of housing, in existing town centres and on the city’s boundary, the conditions for renters will remain difficult.” Mr. Raimondo concluded.
Matthew Bell, chief economist for Australian Property Monitors says, an improving employment outlook means renters will be more likely to agree to higher rents and with the first home owners’ grant ending late last year along with strong house price growth, the move from renting to owning is less attractive.
Mr. Bell goes on further to say that in an era of an undersupply of new properties, strong population growth and low vacancy rates, the prospects for residential property investors is extremely healthy.