Beware ‘sharp rent price rises are inevitable’

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July 28 2020
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Australians should prepare themselves for soaring rental prices once the COVID-19 pandemic passes due to the undersupply of rental properties, a property researcher has said.

According to data released by Propertyology’s head of research, Simon Pressley, only four out of 52 major cities and towns have had a residential vacancy rate above 3 per cent, which is considered favourable for renters.

According to his research, 39 out of 52 Australian towns – 75 per cent of the country – have an undersupply of properties, while nine locations have a balanced market and just four are oversupplied.

“The only thing currently preventing an official declaration of an Australian rental crisis is the sedation effect of the coronavirus containment measures,” Mr Pressley said.

“Mark my words, sharp rent price rises are inevitable.”

Mr Pressley highlighted that the undersupply is not just regionally focused, with five out of the eight capital cities being undersupplied.

However, Australia’s two largest cities remain oversupplied, with Sydney and Melbourne both having above 3 per cent vacant properties.

The Gold Coast (4 per cent) and Geelong (3.5 per cent) are the other two areas that are oversupplied.

What is causing this shortage?

A lack of supply and mum-and-dad property investors buying their property of choice will cause rising rents, according to Mr Pressley.

“Large parts of Australia have seen several consecutive years of low volumes of properties purchased by investors. As local demand continues to rise, the pressure continues to push rents (and yields) higher.”

“Literally this week, the principle of a property management business told our buyer’s agents that they only have nine vacancies among a rent roll of 1,700. This situation is not unusual for most of Australia,” said Mr Pressley.

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About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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