This Week in Real Estate – 12th March 2022
Rents Are Rising In All Sectors
Inner city rental markets are bouncing back with the opening of international borders.
Cameron Kusher of REA Group’s PropTrack says while inner city units experienced some of the biggest price drops at the start of the pandemic, that is now set to turn around.
“With Australia’s domestic and international borders now largely reopening, universities returning to in-person lectures and people returning to offices throughout 2022, we expect demand for inner city rentals to continue to lift,” Kusher says.
CoreLogic figures show capital cities, regional areas, houses and units all experienced rent rises in the past quarter.
Rents are increasing across Australia because vacancy rates have hit a 16-year low, according to Louis Christopher of SQM Research.
“All this represents an acute shortage of rental properties,” he says. “And the shortage has already been translating into large surges in weekly rents across the country. It is now very likely market rents will rise by over 10% this year.”
Shortages Push Up New House Costs
The average cost of a new home increased by 19.6% in the past year as a result of surging labour and material costs.
Australian Bureau of Statistics figures show year-on-year inflation in new house values hit the highest rate in more than 30 years.
Total new dwelling approvals dropped 28% but many builders have full workbooks trying to deliver houses they signed up under fixed price contracts under the Federal Government’s HomeBuilder scheme.
BIS Oxford Economics principal economist Tim Hibbert says the backlog would take some time to clear and would likely continue well into 2023.
“The cost growth profile is going to be strong into 2022 – well into double digits nationally for houses and that’s on top of a pretty frothy 2021,” he says.
