Rental growth is set to rocket over the coming months and will outstrip capital growth, according to NAB.
The bank's latest residential property index forecasts that rents are expected to rise by 3.5% in the next year and by 5.2% by March 2013.
Meanwhile, house price growth is expected to remain 'modest', with the overall national average increasing by 0.6% in the next 12 months and 2.6% over the next two years.
Western Australia, New South Wales and ACT are expected to be the market leaders for both capital growth and rental gains, says the NAB report, while Queensland, South Australia and NT are likely to be the laggards. Gladstone in Queensland was nominated as the area most likely to experience the fastest capital growth this year.
NAB also reports investors are likely to become more important over the next year, especially for new residential developments. Investors are now tipped to account for around 33% of the market in the next 12 months, up from around 24% in our December survey.
"This may reflect recent changes to superannuation rules making it easier to hold property within self-managed super funds," says the report. "Anecdotal evidence suggesting a surge in the number of buyers in the market looking for investment properties, usually apartments."
Even so, the proportion of investors in the market for existing properties is expected to be much lower, accounting for only 20% of sales.
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