35 months of consecutive rental hikes in Australia: What does this mean to investors?

While risky investors have taken a step back, smart investors are making a killing to position themselves for a long-term ROI.?

The resurgence of Australian real estate makes it appealing to investors across the globe. While we’re still experiencing a significant market shift, house prices continue to soar steadily, reaching new heights every month.?

Let’s start with Australia’s rental crisis; in recent times, it’s showing decent improvement averaging at 1.2% nationally in August 2023, with new listings hitting heights during August - the first month-on-month increase since Aug 2022.?

But, unlike other countries, renters in Australia are also private landlords about 26%, and while homeownership is declining, it’s worth mentioning that cashed-up investors especially investors with the right strategies, are profiting from rent hikes.

Why rental hikes are wooing the smart investors instead??

With interest rate hikes, the cost of holding investment properties increases, which is why seasonal investors are off-loading their properties.?

This generates opportunities for smart investors to capitalise on ready-to-settle or ready-to-rent properties to acquire distressed assets at a lower than market price, leverage on exponential weekly rental income, and capital growth.?

The graph from CoreLogic is a testament to Australia’s rental market favouring investors. Across Australia, rents are at their highest levels in all capital cities, not sparing even Darwin, which has historically remained unaffected by rising rents.?

Potential owner-occupiers are dropping their plans to purchase their homes, providing opportunities to investors with a constant supply of renters.?

In Parramatta, for instance, unit rents jumped more than 25% in just the first three months of 2023. Amid low vacancy rates, record overseas migration has only contributed to higher rentals.?

In fact, hundreds of tenancy applications were flooded for every single rental property in Sydney - pushing rents even higher, and NSW’s decision to outlaw ‘rent bidding’ has proven to fail to stabilise rent hikes.?

Coupled with inflation that went out of control, historically investors will invest more in assets class for tax benefits, while the stock market couldn’t reap the same benefits.?

Across Australia, rents are at their highest levels in all capital cities, not sparing even Darwin, which has historically remained unaffected by rising rents.?

When we speak to our savvy investors, they all say one thing - that Australia will see consistent demand for real estate, and it is only going to get big, so while no one right now is thinking about the need to liquidate after investing, they definitely have tax and floor plan strategies to maximise ROI.?

Nevertheless, Australia’s social housing is set to cross 670K dwellings in the next decade, and yet, the Govt. has no concrete plans to tackle this crisis.?

Smart investors will continue to benefit from all factors included, with ATO signalling investment property ownership rose by 20% in two decades, so, the the urge to rake benefits from Australia’s golden investment market is here to stay for long.?