Property investors eye up inner city rental units as open borders flip apartment market
Open international borders could make it easier for renters looking for a unit, new research has revealed.
CoreLogic’s Hedonic Home Value Index report, released this week, showed the rental market in inner city areas popular with students and migrants was hit hard by lockdowns and border closures. The result was that investment activity within inner city rental markets declined.
CoreLogic research director Tim Lawless said the rental market was starting to change.
“When it comes to Sydney, the whole investment story matters,” Mr Lawless said.
“The good news for renters is that investment activity in 2022 is tracking higher – meaning more investors are active which will bring about more rental stock.
“Right now, the demand outweighs the supply.”
CoreLogic research director Tim Lawless said more property investors are active.
Rents for Sydney units fell by 7.2 per cent at one stage and then rose back to where they started in 2021. This was due to consistent tenancy demand, he added.
Meanwhile, prices for houses experienced the fastest rate of growth since the late 1980s as wages stagnated. House values at the end of 2021 were 22.1 per cent higher than the start of the year, CoreLogic reported.
“Over the last 12 months, we saw record low interest rates and high demand for housing,” Mr Lawless said.
“Compare this to the ‘80s in which market deregulation resulted in high mortgage rates that led to the market withstanding the impending recession.
Property for rent in Sydney. Picture: NCA NewsWire / David Swift
“We have seen this trend in previous growth cycles, where more expensive housing markets have shown greater levels of volatility, housing values tend to rise more through the upswing but record a larger decline through the down phase of the cycle.”
While housing values have grown over the past year, the number of home sales also reached new record highs despite stalled overseas migration and a lower number of listings.
There is now a higher barrier of entry for first home buyers and those on low incomes as it becomes more costly to raise a deposit and pay stamp duty costs.
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