A property forecaster says rents are likely to climb between 6 and 7 per cent this year, after stagnating last year.
The rental report by Australian Property Monitors shows average capital city rents increased by only 2 per cent last year but have already gone up 1.5 per cent in the first three months of this year.
APM economist Matthew Bell says it is not surprising that rent rises are returning to the average levels of the past five years, given the economic recovery.
“Long-term, we’ve seen house rents in the major capitals rise by between 6 and 7 per cent, and a bit higher for units,” he said.
“Given the flat 2009, I think we’ll get to those levels, if not higher.
“The first quarter of 2010 already shows that for most capitals we’re well on the way to that 6 to 7 per cent annual growth rate.”
Mr Bell also says there are more potential buyers being priced out of home ownership.
“This time last year, all through last year, ownership was quite a good alternative for a lot of renters and, given the recent strong price rises we’ve seen, that’s not as much the case now,” he said.
“There are some first home buyers where affordability is an issue, and investors are coming back into the market and snapping up some of those houses.”
I was looking to invest in real estate but the rents are too low!! They need to go up at least 10% for me to invest
On 10% most if not all the properties will be positive cash flow ones. I don’t think in a short term there will be many of them. Of course, if you dig around, you can find some properties with 10% rental yield.