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Renovating investors drive rents upward

By Steven Cross
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Rents have grown at more than double the rate of property value since the onset of the financial crisis, new research has revealed.

According to RP Data’s latest Property Pulse, since the end of 2007, combined capital city home values increased by 13.4 per cent compared to the 32.1 per cent increase in rents.

In five and a half years, growth in capital city home values has not increased at a rate higher than inflation, creating an excellent market for investors according to RP Data’s research analyst Cameron Kusher.

“With mortgage rates almost at record lows, you would think first home buyers would be capitalising on these conditions. However, it's investors and upgraders that are really the key beneficiaries,” he said.

“In a typical market, an escalation in rents coupled with limited value growth would see increased first time buyer activity. However, this has not been the case to date.

“The reasons are likely due to a shift in first home buyer incentives to specifically target the more expensive new product, as opposed to generally more affordable existing products in a number of states."

With investors snapping up property with lower mortgage repayments than ever before, Mr Kusher believes there are more renovations happening, which is forcing asking rents higher.

“Upgraders and investors are now taking advantage of the low mortgage rates and limited value growth to upgrade from their current home into a superior one as mortgage costs have tumbled,” he said.

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Top Suburbs

Highest annual price growth - click a suburb below to view full profile data:
1.
FAIRLIGHT 46.02%
2.
CASUARINA 44.36%
3.
THE ENTRANCE NORTH 41.09%
4.
ULTIMO 40.67%
5.
LAVENDER BAY 40.2%