We have discussed the declining prospects for Oz housing over the last few months as it becomes apparent that the last decade of debt driven government supported growth looks like it is finally coming to an end. Without further government intervention the market seems destined to take the tour towards the bottom. This is a big problem for the investment market because many “investors” are holding onto loss making properties simply to cash in on the capital gain. In Queensland and Western Australia and Tasmania that plan is already in trouble.
The other part to the “investment” market is rent. This, unsurprisingly, also looks like it is struggling. We note today that rental returns on “investments” aren’t doing as well as expected, with rents actually falling in the September Quarter across the country.
Rents remained stable in most Australian capital cities in the September quarter of this year, according to Australian Property Monitors’ (APM) rental report.
Nationally rents fell by 0.3 per cent for houses and 0.5 per cent for units.
The September quarter was the second consecutive quarter where rents held steady, says APM’s head of research Yvonne Chan, with the March quarter this year being the last period of positive growth.
Annual rental growth for houses stood at 2.8 per cent, which is well below the long-term average growth rate of 6.8 per cent she says.
Rents for units grew by a stronger 4.8 per cent over the year but still performed well below their long-term average of 7.3 per cent.
Despite a flat rental market, Chan says the outlook for rents is still one of growth.
Demand and supply pressures remain as population growth continues,” she says. “Tight vacancy rates, together with a strong economic outlook, will lead more of the population into the rental market and inevitably higher rents.
Well Mr Chan, we wouldn’t be holding our breath. Rising population ? Tight vacancy rates ? We can agree that the economy seems strong in comparison to other OECD nations, however that is already the case; rents haven’t moved for 6 month in this environment so we are unsure how this is an argument for the positive.
With falling prices and now it seems stagnant (at best) rents we wonder if “investors” know where the nearest exit is? Let’s hope they can find it behind all those other people trying to get out.
Disclaimer: The content on this blog is the opinion of the author only and should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The author has no position in any company or advertiser reference unless explicitly specified. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult someone who claims to have a qualification before making any investment decisions.