Rents increased by 1.4 per cent nationally and 2.7 per cent in the capital cities over the past 12 months although house rents in Sydney, Melbourne and Darwin were flat, a report by property data collection agency RP Data found.
At the same time, consumer prices rose at a faster pace in March 2011. According to the TD Securities-Melbourne Institute, the inflation gauge was 3.8 per cent in the year to March 2011.
When we put the rental growth and CPI together, it is interesting to see that rents actually went down relative to the inflation rate.
For property investors, this mean although we are likely to see increasing demand for rental properties due to high housing prices and thus rents will increase further in 2011 the rental growth might be limited to a percentage below the inflation rate in 2011.
Why is it that rent will go down then would come back up then drop again? What would be best in this situation? To rent or to buy a house?