While many experts are predicting property values to remain relatively flat, rental yields are expected to strengthen further during the current housing shortage.
Cameron Kusher, senior research analyst with RP Data, noted that on a rolling six-month average basis, construction of new investment houses dropped by 7.9% in November 2008 compared to the month earlier. Over the year to November, the value of investment housing sank 17.9%, with volumes currently sitting at levels equivalent to those seen in mid-2007.
"The implication of fewer dwellings being built for investment and fewer existing properties being purchased is that the shortage of rental properties is likely to continue," he said.
Kusher said this trend would be particularly evident in capital city areas where rental vacancy rates are already below 2% in Sydney, Melbourne and Adelaide.
"With underlying demand increasing due to rising population growth, the housing shortage and the rental shortage situation is likely to become exacerbated," he said.
"On the flipside, for those who own or are thinking of purchasing investment properties, it's anticipated that rents will continue to rise as property values remain flat. The by-product of these rental increases will be continuing improvements to gross rental yields. These improvements in yields may also be enough to encourage investors back into the market in mid to late 2009, particularly those investors that are driven by yield rather than short-term capital growth."
Over 2008, all capital cities recorded significant improvements in their average gross rental yields, with Darwin recording the largest increase of 0.81% to 6.47%, according to RP Data. Perth came in second, gaining 0.76% to reach 4.23% while Sydney added 0.58%, rising to 4.93%.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
st kilda west
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out