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Market Wrap

What factors are pushing up rental yields?

What’s happening in the rental and investment sector?

There are several factors currently affecting the rental market and rental yields for investors. Firstly, as has been widely reported, Melbourne is experiencing explosive population growth with 125,000 new people joining each year, according to the ABC. This meteoric rise in population is only set to continue, with Melbourne predicted to overtake Sydney as Australia’s largest city by 2031.

This means that there is an increasing demand for a range of property types, including rentals.  

Other things coming into play

Alongside the rising population, Melbourne’s current rental market is tightening. This is reflected in the most recent vacancy rates of 1.7 per cent (SQM Research).  

“We’re seeing very low vacancy rates, which presents a classic case of supply and demand,” says Bentleigh Director Sophorn En, adding, “This means that with a shortage of rental properties, investors and owners are seeing rental yields increasing.” The latest data from CoreLogic reiterates this sentiment. National rents are 0.4 per cent higher compared to the previous year.

What does it all mean?

For those either looking to invest, or who are currently sitting on an investment, this is all good news. If you have secured financing for an investment, now is good time to capitalise on the state of the market – as you are more likely to have the property filled with tenants and will see increases in your rental yields. Likewise if you’ve already got an investment property, you can expect to see demand shift throughout this period. 

For more advice, head to hockingstuart.com.au, or reach out to your local office for more information.

Market Wrap