Asking Rents Are Set To Surge
As vacancy rates plummet, rents could go up 15%.
2 min
A lack of available rentals which has seen vacancy rates plummet to a new 16-year low, may see asking rents surge by as much as 15% nationwide this year according to research by SQM.
Available stock dropped from 1.3% January to 1.2% of total rentals in February – the lowest since December 2006 when the vacancy rate hit 1.1%.
All markets were now in rental undersupply after vacancy rates fell below the 3% threshold for a balanced market and the imbalance had pushed asking rents to 9.4% nationally over the year to March 12.
This was the sharpest rise in five decades and spelled bad news for those hit by inflation according to SQM managing director, Louis Christopher.
“Because the rental market is seriously stretched right now, we could see rents rising by at least 10% nationwide over 2022,” Mr Christopher said.
Housing costs account for approximately 23% of the CPI basket and steep rent rises had major ramifications for inflation.
Mr Christopher added that vacancy rates are likely to fall again over March.
“The first week recorded yet another decline in rental accommodation listings, and the impacts of the flood have not yet been reflected in the data, so we can expect rental vacancy to tighten again,” he said.
Across the country, every city aside from Sydney and Melbourne posted less than 1% vacancy rate last month, while Sydney’s vacancy dropped to 2% and Melbourne’s to 2.3%.
Further, the vacancy rates for apartments in the CBD fell sharply during February, coinciding with the return of international students.
The proportion of rental apartment in the Sydney CBD left vacant dropped to 4.3% from 4.5% in January while Melbourne saw its CBD vacancy rates drop 1.2% to 2.8%.
Brisbane faired similarly with the vacancy rate falling 1.4% to 4.4% and Adelaide was down by 1% to 1.7%.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Ray White’s chief economist outlines her predictions for housing market trends in 2024
2 min
Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.
Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.
“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”
Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”
Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”
3 key housing market trends for 2024
Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.
Luxury apartment market to soar
Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”
Homes to become even greener
The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”
More people living alone
For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
