The mismatch between supply and demand for units is driving rental increases to record levels, attracting investors despite uncertainty about sharply rising interest rates and falling prices.
Andrew Wilson, chief economist for property consultancy My Housing Market, says: “The fundamentals for investors are strengthening. Investors need to see beyond the current round of rate rises and uncertainty.”Annual growth in unit rents is outpacing house rents both across combined capitals and regional markets by up to 100 basis points, according to CoreLogic.
Rising yields: Falling property prices and rising rents mean that gross yields are rising. Gross yield is a percentage calculated by dividing the annual income from the property by its sale price. National gross unit yields rose six basis points to about 3.9 per cent during June – and 26 basis points year-on-year – as rental growth outpaced capital gains. Yields in Perth are around 5.5 per cent, Melbourne 3.7 per cent and Sydney 3.3 per cent, according to CoreLogic.
Downsizers: An ageing community means many will be considering units in the short to medium term as their living preferences and housing requirements change. Government incentives for those aged over 55 are encouraging the transition. Many do not require financing because they have significant equity in their family home.
Rising demand & a shortfall in new apartments are a boon for property investors who can pass on the cost of interest rate rises. We agree, REIVictoria REIANational
Meritons has got 1000s of unsold units They are land banking
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