Throughout 2021, annual rent value growth was at its highest levels since 2008
Rental returns in Australia have increased 11.8% in the last 12 months while gross yield fell to record lows, according to CoreLogic, a leading property analyst group.
While rents saw a mild dip during Covid lockdowns and border closures, there was a swift recovery in these values, followed by a surge through 2021. Rents marginally dipped by -0.8% between March and August 2020.
There are many reasons rents have risen according to the report. “Investor activity had been relatively subdued between 2017 and mid-2020, contributing to rental supply constraints. Rental supply may also have been eroded through the rise of rental services like Airbnb, which have enabled property owners to pivot to the short-term rental accommodation market,” a report on rentals published by Core Logic stated.
Rental spikes in regional tourist hotspots like Phillip Island and Wollongong may have been particularly prevalent due to the conversion of investment properties into short-term rentals in these areas. COVID related work-from-home rules contributed to the rental spike in regional areas too.
More recently, due to the shortage of rental accommodation in Hobart, the City Council sought an urgent report to find out if Airbnb properties are causing a shortage of rental accommodation in the city. A motion proposed by Cr Helen Burnet suggested an urgent report be prepared to determine whether specific council rates should be applied to whole house visitor accommodation and vacant land zoned as residential.
Across Australia, median advertised rents since March 2020 have increased $30 per week to $470 per week
Even if there may not be any specific rates for Airbnb rentals, the rise in rentals adds to inflation worries for regulators across the country.
The recent rent value growth was at its highest levels since 2008. Across Australia, median advertised rents since March 2020 have increased $30 per week to $470 per week.
There has been a change in rental preferences towards regional housing options through the pandemic. Rents in low-density areas have seen a substantial increase. Whether there will be a reversal of this trend depends on the pandemic and how it plays out from here. With international borders opening and international students coming back into the country, rents in high-density areas will rise in 2022.
The report also noted how gross rental yields have declined. It is because gross rental yields are a portion of the purchase price of a property, and purchase prices of properties have grown 24.6% since March 2020, outpacing the 11.8% rise in rents. Nationally, gross rental yields have fallen from 3.8% in March 2020 to a record low of 3.21% as of February 2022. As housing growth has started to slow, this record-low gross rent yield figure appears to have begun stabilising.
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#Rental returns in #Australia have increased 11.8% in the last 12 months while gross yield fell to record lows, according to CoreLogic, a leading property analyst group. 🏠 #TheIndianSun #Propertyscapehttps://t.co/kbmBBTaXay
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