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Property investors are being urged to study the fundamentals, as low vacancy rates and inventory can still lead to portfolio growth in a COVID-19 world.
Analysis exclusively done for REB’s sister brand, Smart Property Investment, by InvestorKit director Arjun Paliwal has shown that Australia is currently experiencing a property shortage.
“To the surprise of many, many suburbs across Australia are actually going through high levels of rental and price competition with low inventory levels and below 1.5 per cent vacancy rates,” Mr Paliwal said.
While much of the focus remains on Sydney and Melbourne, which have seen a reduction in rent due to falling migration levels, Mr Paliwal’s research shows it’s not a national issue.
“A large part of Australia is actually facing a rental crisis. Vacancy rates, fast declining rental days on market, local property manager sentiment, rising rents, and reducing over 21-day listings are clear signs of this.”
Sa3 regions tipped to grow
Mr Paliwal said Australian property is seeing mixed results, with the biggest mistake an investor could make is believing the entire market is performing the same way.
Instead investors are being urged to get into the micro with their analysis, as it can reduce the risk of buying areas impacted by higher unemployment, unaffordable housing, migration and supply issues.
“Our analysis shows over 80 SA3 regions displaying lowering/low stock, tight vacancies, decreasing rental and price days on market, and in turn higher pressure on prices. This make-up of 80 SA3s is a touch over 600 suburbs across the country; 600 is no small number of opportunities when it comes to the number of markets to safely grow your wealth.”
1. Wynnum-Manly SA3:
- Inventory now = 2.88m
- Inventory 12m ago = 3.96m
- Vacancy now = 1.4 per cent
- Vacancy 12m ago = 2.3 per cent
- Rental days on market 12m change = 9 per cent drop
- Over 21 days rentals on market 12m change = 39 per cent drop
2. Bendigo SA3:
- Inventory now = 2.89m
- Inventory 12m ago = 3.25m
- Vacancy now = 0.8 per cent
- Vacancy 12m ago = 1.2 per cent
- Rental days on market 12m change = Steady
- Over 21 days rentals on market 12m change = 30 per cent drop.
3. Mornington Peninsula SA3:
- Inventory now = 2.87m
- Inventory 12m ago = 2.92m
- Vacancy now = 1.2 per cent
- Vacancy 12m ago = 3.0 per cent
- Rental days on market 12m change = 8 per cent drop
- Over 21 days rentals on market 12m change = 60 per cent drop
4. Gosford SA3
- Inventory now = 2.66m
- Inventory 12m ago = 3.4m
- Vacancy now = 1.2 per cent
- Vacancy 12m ago = 2.9 per cent
- Rental days on market 12m change = 8 per cent drop
- Over 21 days rentals on market 12m change = 57 per cent drop
5. Warrnambool SA3
- Inventory now = 2.27m
- Inventory 12m ago = 2.78m
- Vacancy now = 0.8 per cent
- Vacancy 12m ago = 0.8 per cent
- Rental days on market 12m change = 15 per cent drop
- Over 21 days rentals on market 12m change = steady
“The regions mentioned offer a balance of affordability, lifestyle, and are some of the many more regions likely to see well-placed short to medium-term performance, pending no other major disruptions,” Mr Paliwal concluded.
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