Residential investors on alert as rents set to continue to rise: CBRE
Residential rents are forecast to rise further in 2024 as vacancy remains at record or near record lows, CBRE has forecast.
CBRE’s Residential Figures Q4 report suggested continued growth in the rental market, namely down to a mix of large immigration numbers and supply shortages.
Rents are already at record highs, according to the data collected by CBRE, REIA and SQM Research, while vacancy rates are touching record lows across the country.
"Substantial rental growth has continued across most markets, approaching 30% year-on-year in some cases," CBRE's report noted.
"The surge in net overseas migration has had a significant impact on Australia's residential markets, particularly rental markets which were already feeling the effects of tapering supply pipelines."
CBRE said that while the recently released migration strategy has highlighted measure to reign in the net overseas migration figure, the three-year projection of 1.135 million to FY25 still translates into demand for around 450,000 new dwellings. Adding in demand for natural increase, new dwelling demand over the next three years will likely exceed 600,000.
Completions of both houses and units in FY23 totalled a little under 175,000.
"With the pipeline slowing further, this suggests new supply will not keep pace with the demand generated, indicating little relief from the tight rental markets for the near future.
"As a result, rents generally will continue to increase above CPI, although the pace of growth will ease as affordability pressures bite and alternatives such as increased share-accomodation or younger people remaining at/returning home become more common."