RP Data said rents in capital cities are expected to increase by around 7 per cent during 2011 compared with the 4.2 percent increase in 2010 while NAB’s residential property survey, which tipped moderate falls in house prices in 2011, said rents would increase 2.8 per cent in the same period, and 4.1 per cent over the next two years. Rents would rise most for inner city units and the more expensive housing markets on metropolitan outskirts.
The rise in rent comes amid an expected increase in inflation and while home prices are expected to remain flat, if not fall (ANZ Bank and National Australia Bank released separate reports suggesting house prices will weaken in 2011).
I think the rents will increase at least 5% in 2011 although some people think even the 7% jump is grossly underestimated and this rise in rents will make property an even more attractive investment. However, I think the late half year of 2011 might be the better time to enter the market for potential property investors as interest rate will most likely rise by then and this will bring down the property prices.