Rent rates set to increase

January 13, 2010

Research group forecasts rate rise, claiming there are “not enough houses” to meet growing rental demand.

Rent charges are expected to rise this year, as landlords look to pass on the cost of recent interest rate increases to tenants, says one research group.

Australian Property Monitors predicted that rents would rise in Melbourne by 5 to 7 per cent, in Sydney by at least 4.4 per cent, in Brisbane by 8 per cent, and in Perth by 11 per cent. The group added that the property markets in Perth and Brisbane would be playing “catch up” with Sydney and Melbourne markets.

Average rental costs on a Sydney house would approach $500 a week, while in Brisbane and Perth prices were likely to reach an average of $400 a week.

The expected rises come after a weak year for national rent growth in 2009. In the December quarter, weekly rents remained unchanged in Sydney, Brisbane, Melbourne and Hobart. But APM economist Matthew Bell predicted that December was “likely to be the last quarter of flat rental growth”.

At the end of 2009, the Reserve Bank raised the official cash rate for the third month in a row, taking the rate to 3.75 per cent. Further rate increases are expected from the RBA next month.

Bell said that, with continued population growth and low vacancy rates in the rental market, “there’s simply not enough houses being built to house the rental demand that’s going to be there”.

With house prices on the increase, ownership was becoming out of reach for more people, in turn adding to the demand for rental properties and pushing rental prices up.

Bell explained that those facing unemployment or reduced working hours would be worst affected, and be “forced to move a bit further out and away from those areas of employment”.

*Image* courtesy ["The Truth About...":]

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