With vacancy rates increasing and asking rents stagnating, investors may need to rethink their property strategies, according to a leading market researcher.
Speaking at the SQM Research conference yesterday afternoon, the company's managing director, Louis Christopher, said there is no doubt the property market is heating up and that investors are driving the surge in interest - but he said there were some other factors to consider.
"Vacancy rates have been edging up and rents have been slowing down nationwide," he said. "'Asking rents' haven't done much in the last 12 months. In fact there are actually some arguments that they might have fallen a little."
He said investors who are getting excited as heat returns to the market need to weigh up what they're buying into.
"Are [investors] going to be able to jack-up rent on day one? No they won't. They won't be able to do that. They are buying into static rents at this point in time," he said. "It will change maybe in the long-term but it means they're also buying into lower and lower yields as well at this point in time."
Mr Christopher pointed to the eastern-Sydney suburb of Point Piper as an example, where property prices are high, but rental yields are less than one per cent.
"That's to be expected at the top-end of the market. The higher you go, the lower the yields and as an investor the lesson from that is to consider maybe buying at the mid-level.
"I think that's what investors are doing. It seems to be more cost-effective."