(Realestate) – Australia needs more rental properties and there are some areas where individual listings receive over 2,000 views on realestate.com.au.
For savvy investors, there’s an opportunity to make the most of current market conditions.Get Rental Ready!
Where do we need more rental properties?
Rental demand right now is highest in Hobart, Adelaide, south-east Queensland and Melbourne. These areas are seeing over 2,000 views per listing.
There are just not enough rental properties in Hobart. Picture: Getty
In the case of Hobart, it is well over 3,000.
At the other end of the scale is Sydney. The Parramatta region is currently seeing only 800 views per listing – driven by very high levels of development and property investment in this area.
Strong rental demand almost always means there is an imbalance between the number of rental properties available and jobs growth.VIC rental reforms: Leases
It doesn’t mean that young people are starting to leave home in droves or existing renters are rushing around looking for better deals.
For Sydney, it is likely an oversupply of rental properties. For Hobart, still too few homes are being developed compared to the number of people that want to live in the city.
It isn’t all bad news for Sydney however – high proportions of renters in the market are under housing stress, spending more than 30% of their household incomes on rent.
It’s not great news for investors, but with a drop in rental demand, it means more properties are available and which does mean that rents are likely to continue to decline.
Want great yield? Buy cheap in Adelaide
The best rental yields at the moment are found in mining towns – rental demand has surged.
For capital cities however, Adelaide is not only seeing very high rental demand on realestate.com.au, but some Adelaide suburbs are seeing the highest rental yields of any capital city suburbs in Australia.
Elizabeth Downs is not one of Adelaide’s premium suburbs, but the average rental yield is now 7.7%. Compare that to Albert Park in Melbourne, one of the top suburbs for buyers, where rental yields are just 2.4%.Property Outlook: July 2019
A high rental yield and a strong outlook for capital growth is generally impossible to achieve – the last market to have this would have been Hobart, but only if you bought around four years ago.
For northern Adelaide, capital growth is occurring but these suburbs are likely to remain pretty cheap.
They are unlikely to see any form of major urban renewal for some time which tends to drive strong price growth in low cost suburbs. So, strong yields, but don’t bank on huge price growth.
Any good news for Perth?
It has been a tough five years in Perth. Some parts of the city even have median prices lower than they were a decade ago.
A recovery in that city began in 2017, but was derailed by the announcement of the Royal Commission. Right now, a recovery is in place but it is slow and patchy.
Price growth has been occurring in premium suburbs for some time now and it is good news that this is now spreading to slightly cheaper suburbs. Rental growth continues to be strong in the most expensive suburbs.
Perth’s property market is picking up. Picture: Getty
The outlook for the Perth market is largely positive. Mining towns are recovering and any activity in the mining sector has a strong positive flow on effect to the Perth residential market.
Commercial property indicators are looking more positive – the office vacancy rate is still high but steadily coming down, further evidence of jobs growth. While positive, price growth is likely to climb steadily, as opposed to boom-like conditions over the next 12 months.Tips for winning a rental application
Stock levels still a problem
Clearance rates remain high – 78% in Sydney and 75% in Melbourne – but stock levels remain dismal and this is pushing up the clearance rate and prices in premium suburbs where most auctions take place.
Blue chip suburbs like Vaucluse are now seeing positive growth. Picture: realestate.com.au
While price growth remains strongest in many regional mining towns (Whyalla and Blackwater are topping the list), we starting to see some strong movement in some of our most expensive suburbs.
Vaucluse, Bondi Junction and Bellevue Hill in Sydney are now seeing positive growth over a 12 month time period. In Melbourne, Prahran has started moving ahead.