Rental shortages beginning to bite

Rental markets are tightening as Australians move away from share houses, according to

The announcement:

Overall, rental markets are now tightening as Australians move away from share houses and denser living, and household sizes within the rental pool may also be declining, according to Pete Wargent, co-founder of 

“This is leading to a chronic shortage of rental properties across many suburban, outer suburban, coastal, and regional locations, and will be reflected in surging rents in the June 2021 quarter and beyond,” Mr Wargent said.

Mr Wargent said that “ultra-low interest rates and fear of missing out are still pushing dwelling values to new highs with double digit growth still on the horizon for many areas in the country, although things will most likely calm down in the second half of the year, as buyers become more circumspect and more listings come online”.

Doron Peleg of RiskWise Property Research said that the firm’s latest Residential Risks & Opportunities Report for May 2021 confirmed the expected strong performance of the Australian housing market this year.

“As previously projected, the housing market has shifted through the gears to the point where fear of missing out (FOMO) has become a major factor. And it remains likely that the ultra-low interest rate environment will remain in place for at least for the next 24 months, and possibly longer” Mr Peleg said.

This, combined with only a low availability of stock of quality assets in popular areas, has been reflected in very strong auction clearance rates and rising prices, according to the latest RiskWise report.

It is projected that both Sydney and Melbourne will deliver double digit price growth in 2021. Many SA4 regions are also likely to deliver double digit growth in 2021.

Mr Peleg said “in particular, houses with a high land value component and scarcity value are likely to enjoy very strong demand and capital growth, both in the short and long term. Our key underlying assumption is that the COVID-19 vaccinations that have been rolled out will provide a sustainable solution to the virus over time”.

“As mentioned in our previous reports, our market research shows that some sectors of the housing market continue to represent an elevated risk at the present time, in particular inner-city apartment markets, which have been oversupplied and have experienced falling rents as Australians look to avoid the higher density locations” Mr Peleg said.

Mr Wargent of said that “there remains a high degree of uncertainty in relation to immigration, which is a major demand factor for inner-city rental apartments.”

“There are plans afoot to start brining international students into Australia, which will take the pressure of inner-city rental markets. But the risks of extended border closures, combined with high vacancy rates and increased serviceability risk, have made inner-city apartments less attractive to investors, who represent the main cohort of buyers in those areas,” Mr Wargent said.

The full RiskWise Residential Risks & Opportunities Report can be accessed at the following link:

Source: Medianet 

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