Rising rents a boost for investors

Since the pandemic hit, the rental scene across much of Australia has been a roller-coaster ride. The exodus of residents as we closed our borders, especially overseas students, had an economic impact on many landlords.

Today, the situation is turning around with the national rent average rising almost 2 per cent, according to industry researcher CoreLogic.

With the cost of credit still at record-low levels, there is every reason to explore a first property investment or expand an existing portfolio.

Strong demand for detached housing is driving the increase in average rents, but it's trickling into the apartment sector.

Supply is under pressure because investors continue to be outbid by owner-occupiers anxious to secure their forever home or move up the property ladder. The result is a dearth of available rental properties in many markets.

Smart, motivated investors seek opportunities in this scenario, casting their nets wider than their backyards, and considering opportunities interstate and in selected regional areas where rents are rising as quickly as in the cities.

If you're thinking of investing in property right now, below are some key points to consider.

Cash is king

Interest rates remain at record-low levels. The Reserve Bank of Australia has signalled rises later this year, so it's a great time to lock in a deal with your financiers now. Money isn't going to stay this cheap.

Not just rent

Remember, a successful investment isn't only about the rent you will receive to cover any loan. Your property must benefit from capital growth, too. We can guide you on local prices trends and the rental demand in our area.

House odds

Right now, demand is strongest for detached homes. Their prices make it the highest entry-level for new investors. However, uncovering a fixer-upper, or a distressed or urgent sale, can be an excellent investment.

Units on the rise

Rent for apartments are also rising. According to CoreLogic, growth is evident in the capital cities for apartments and a growing number of regional cities are also building more townhouses and units.

Calculate yields

The rise in property values in 2021 (+21% across Australia) means yields – the percentage of rental income against a property's value – are lower than the norm. From a 5-6% average, it's now around 3.5%. But a higher deposit and buying the right property in the right market can improve this and smart investors with a long-term view know this.

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