Rising interest rates will force tenants nationwide to collectively pay an extra $2 billion in rent over the next year, according to Ray White.
Ray White’s director of property management Ben White said the RBA’s monetary strategy to increase official interest rates will flow on to the rental market.
“Every force in the market place will be driving rents higher,” Mr White said.
“The mortgages of rental property owners are becoming more expensive so it’s inevitable that this will result in rents going up.
“Property managers can expect to be conducting a lot more rent reviews this year.”
The RBA has increased the cash rate five times since October last year, lifting the official rate to 4.25 per cent after it was dropped to a half century low of 3.0 per cent in response to the global financial crisis.
Mr White said with most economists predicting the cash rate to be increased to around 5.0 per cent by the end of this year, this would put further pressure on rents.
“This will have a major impact on the economy,” he said.
“There are around two million rental properties in Australia and if rents were increased by around seven per cent or $20 a week that amounts to $2 billion over a year.”
Mr White predicted a significant increase in rent review valuations over the next 12 months with landlords expected to seek increases to cover the cost of the interest rate rises.
“The rental market has been relatively soft for a while so we will see a lot more rent reviews taking place as a result of these interest rate rises,” he said.
“Professional property managers will be under pressure to determine the best market rent rate.
“A property manager on top of their game will not only be working to get a property tenanted, but also help their landlords get the best rent for that property.”