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Home Investment NewsReal Estate Investing This is why investors are returning to the Australian property market.

This is why investors are returning to the Australian property market.

by xyonent
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Investors 1.jpg

Key Takeaways

Strong rental price growth is maintaining healthy rental yields and the potential for large capital gains is drawing investors back into the market.

Australia is in the midst of a rental crisis due to a chronic shortage of rental properties and strong rental demand from a rapidly growing population.

Both buyers and sellers are confident about current market conditions.

According to PropTrack data, the number of properties coming onto the market is on the rise, auction transaction volumes this year have consistently been well above the same period last year, and sales have also increased significantly.

Strong rental price growth is maintaining healthy rental yields and the potential for large capital gains is drawing investors back into the market.

Australia is in the midst of a rental crisis due to a chronic shortage of rental properties and strong rental demand from a rapidly growing population.

According to Miss Eleanor KriegPropTrack Senior Economist:

“This situation has brought investors back into the market.

New lending, excluding refinancing, increased for the third consecutive month in April.

This increase in new lending comes as housing market conditions improve from 2023 onwards as prices begin to recover from the declines seen in 2022.”

New loans (seasonally adjusted)

Trust between buyers and sellers

Both buyers and sellers are confident about current market conditions.

Data from PropTrack shows an increasing number of properties coming onto the market, with auction transaction volumes this year consistently well ahead of the same period last year.

Sales also increased significantly.

New lending in April increased 4.8% from the previous month, the highest level since January 2022, and the 24.6% increase from a year earlier was the highest level since December 2021.

New home loan share

Investor lending (5.6%) and home occupancy lending (4.3%) both increased, with the growth in new lending driven by investor activity, up 36% year-on-year.

Rental prices and yields

Although rental price growth has slowed recently, rents are still rising faster than property prices.

This has helped drive gross rental yields to their highest level in almost four years, according to the latest PropTrack leasing report.

Krieg further commented:

“Significant rent increases and rising property prices have attracted investors, particularly in Queensland, South Australia and Western Australia, with new investor lending reaching record highs.

These states are expected to experience strong property price growth throughout 2023 and the first half of 2024.”

New investor loans

Rental market tightens

PropTrack data shows that Queensland, South Australia and Western Australia have the toughest rental markets in the country.

Perth prices have increased by 20.58% over the past year, while Adelaide and Brisbane have increased by 14.49% and 13.69% respectively.

Suburbs with the highest home price growth over the past five years

Vacancy rates in Brisbane, Adelaide and Perth are hovering around 1% making it difficult for many people to find space.

This means that due to high demand, properties are unlikely to remain vacant for long periods of time.

Suburbs with the fastest unit price growth over five years

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