Rental Market The rental market will continue to be a strong performer for the property market. Weekly rents have been generally rising consistently across capital cities, increasing by 4.2% over the past 12 months for houses and 2.9% for units. The combination of lower property prices and higher rental rates has pushed rental yields higher, improving the gross yield for property investors. Demand and supply fundamentals continue to tighten the residential vacancy rates, which are expected to remain low across most capital cities, driving real rents higher. Building activity remains well short of underlying house demand. While upward pressure on rental yields will attract investor activity, interest rate cuts, along with a modest fall in house prices have driven a significant improvement in affordability across all states, providing favourable conditions for first home buyers. Our member survey supports this overview, where 81% expect vacancy rates to remain at current levels, or tighten further, and 76% expect weekly rents to stay the same or rise.
Expected direction of vacancy rates
18
National
NSW
VIC
QLD
SA
TAS
WA
Upwards
19%
21%
15%
11%
17%
50%
–
Downwards
26%
38%
8%
52%
17%
–
43%
Flat
55%
41%
77%
37%
66%
50%
57%
First National Real Estate 2013 Property Market Outlook