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Rental market eases as landlords rush for a slice

13 March 2014 Steven Cross

Landlords could be their own worst enemy, after a leading economist claimed that popularity in investing is causing the rental market to ease.

Speaking with Residential Property Manager, senior economist at Australian Property Monitors Dr Andrew Wilson said the boom in investor numbers is having a detrimental effect on the rental market.

“It’s the flavour of the month and the flight to bricks and mortar has certainly been accelerating over the last few months,” he said.

“We’re starting to see vacancy rates climb in some markets and that’s no surprise because we do have two things happening. First home buyer numbers are quite low due to a number of factors, but we’re starting to see those numbers rise.

“More buyers mean more people leaving the rental market and entering the buying market. This, coupled with the recent surge in investor activity, is having a negative impact.”

As a simple case of supply and demand, Dr Wilson said that more investors buying more stock eases pressure on rental growth, which eases vacancy rates and leads to yields falling as well.

“From what we’re seeing, it’s certainly a better prospect for tenants at the moment," said Dr Wilson.    

“But this is what can be expected to be seen in such strong markets such as Sydney.”

Rental market eases as landlords rush for a slice
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