It might be bad news for renters but for investors, news that rents are on the rise is more than welcome.
Australian capital city rent prices increased by a weighted average of 4.2 per cent in the year to December 2010, Australian Bureau of Statistics figures revealed this week – significantly more than the annual rate of inflation, which came in at 2.7 per cent.
The sharpest residential rent increases were in Sydney and Darwin with increases of 5 and 6 per cent respectively.
Rent prices also rose substantially in Canberra and Adelaide with increases of 4.8 and 4.4 per cent.
On top of this, expectations are that vacancy rates will tighten further into 2011.
According to SQM Research, national vacancy rates sat at 2.2 per cent in December – indicating a considerably tight rental market.
Louis Christopher, managing director of SQM Research, said anything under three per cent generally indicated an undersupplied market.
SQM Research predicts that residential rents will rise nationally between three and five per cent 2011, with Sydney recording the most robust rental growth of five to seven per cent.
Solid rental income can go a long way towards servicing investors’ debt obligations, and in some cases, can even offset a property’s entire costs.
For investors looking for the best rental returns, be sure to check out a copy of the March issue of Smart Property Investment – hitting newsstands next month.
Together with Australian Property Monitors we’ve compiled a list of the top ten locations for rental yields for every Australian state.