Top rent growth performers tell two stories

Top rent growth performers tell two stories

Posted on Thursday, February 23 2012 at 12:36 PM

The top 10 national rental growth champions for the year to January 2012 demonstrate that there are two tales to the rental market, according to WBP Property Group’s New South Wales manager Chris Lackey.

While cautious in reading property data too closely, Lackey said Residex’s recently released Regional Australia statistics highlighting the top performing regions for rental price growth can instantly light up the eyes of investors hunting for high yielding property, however before choosing to buy in one of the top rental growth locations the underlying story needs to be well understood.

Some top 10 rental growth regions could be due to a mining-related population surge – take for example the number one performer northern Western Australia – while other regions are outperforming due to the surge of rental properties turned over to the sales market and a reduced supply of rental housing, said Lackey.

He said rental prices may be statistically growing stronger in these regions, however this is often because the same areas are seeing significant price drops and investors are “pulling money out of these areas to pay off debt elsewhere”, hence a tightening of rental supply.

This shift to a strong rental market could also be due to “the reluctance of lenders and mortgage insurers to lend in coastal areas which have suffered significant falls in demand and prices until the situation normalises”.

Lackey points to three NSW coastal and mountain regions highlighted in the top 10 list as prime examples of this trend.

He said in many of these areas, apart from the areas with mining-related rental growth, investors don’t have the confidence to jump back in yet and instead are waiting for the market to bottom.


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