What is the state of Australia’s rental market?
Whether it’s reporting on property or other sector news, let’s be honest, there is usually a negative angle somewhere – bad news sells! And if you believed the fear-mongering property headlines, you would be forgiven for never going near property as an investment strategy.
However, REIA’s recent State of the Market: Australian Private Rentals report reveals nearly 1 in 3 Australians (30 %) are renters in private or public rental homes, indicating there is still a need for investment properties. Furthermore, with the report finding property investors as a cohort has grown from 4 % in 1980 to 15 % today, it suggests property is increasingly becoming an investment strategy of choice.
The State of the Market report looks at key factors affecting private rentals and explores significant trends and influences impacting supply. In doing so it highlights the unique relationship between Australian renters, property managers and property investors as a critical component to our housing spectrum.
In addition, as pointed out by Hayden Groves, REIA President, the report busts some key myths around who our renters and investors are and how they are working in together to provide housing options for Australians.
Here are some key findings:
Australian renter profile
The report reveals there is no set profile or demographic for an archetypal Australian renter as they come from diverse backgrounds and include young adults, families, seniors, international students and skilled workers.
Many renters appreciate the flexibility that renting provides, such as the ability to easily move to a different area or upgrade to a larger home. In general, Australian renters:
- Have a limited rental tenures ranging from 6 – 12 months.
- Submit multiple applications to increase their chances of being selected.
- 75% of renters are compromising into key features in the rental property.
Property investor profiles
The Australian property investor is generally of working age and holds a mortgage. Investors are usually aged around 35-65 years old; and more 35–44-year-olds own investment properties than 65 – 74-year-olds.
When looking at how many properties do investors own, 70% of property investors only own a single investment property; and just under 20% own two investment properties. Less than 10% of all property investors own 3 or more properties.
According to the report, less than 80% of households own an investment property apart from their primary place of residence, but as highlighted previously, this cohort is growing and has expanded from around 4% of all Australian tax filers in 1980 to 15% today.
When looking at what strategies property investors are using, negative gearing remains an important component to property investment with 60% of tax files in 2018-19 claiming the deduction.
The Property Investment Market
Sale of investment properties increased over 2020-2022 with more investors selling than buying but this trend has reversed in 2023.
For people looking to invest in property, the average rental yield is 3.5% on houses and 4.4% on apartments. While rising mortgage rates may challenge rental yields, current conditions mean that rents are likely to continue to grow over 2023.
Our thoughts
With no set demographic for renters, property investors need to look at other features as to what makes a good investment property, such as proximity to amenities, leisure activities and schools.
People who work and have a mortgage can have an investment property; they have done their research, reviewed their finances and taken advice, and decided on an investment strategy that works for their particular financial situation.
These are certainly interesting times, but the one thing we’re sure of is, everyone needs somewhere to live; this is why our family business is still here after nearly 50 years.
We understand property and we understand the market, and its’ cycles; as well as managing and selling property our aim is to give you information to help you make informed decisions when planning for the future. We’ve helped thousands of people realise their financial goals through property, and we’d like you to be one of them.
Get in touch with us to find out how our property management services can make your life easier.
Drop into the Cardiff office or give us a call on 02 4956 9777. Or send us an email at mail@newcastlepropertymanagement.com.au – we’ve helped many people realise their financial dreams through property and we’re keen to help you.
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