Australian Property News

Vacancy rates the key to rental growth

Posted on Thursday, March 04 2010 at 5:51 PM

The idea that higher interest rates lead to rising rents is a myth, property researcher Michael Matusik says.

Instead, by far the biggest impact on rental prices are vacancy rates, says Matusik, from Matusik Property Insights.

"Despite what some property commentators seem to think, landlords don't have target yields that need to be met, and even if they did, they're not able to simply flick a switch and increase rents," he says.

"Most landlords and property managers are rational operators and won't risk a vacant property by lifting rents."

Matusik says anecdotal evidence and his own experience suggest that vacancy rates are much higher than the real estate industry suggests.

He believes the residential property market is adequately supplied at present.

"Rents showed little growth during 2009 and we anticipate similar throughout most of Queensland and, in fact, Australia this year."

"The recent predictions of rental growth exceeding double figures, unfortunately for investors, is unlikely to happen."

"Weekly rents, at best, could rise between three per cent and five per cent this year, with zero per cent to two per cent being the more realistic outcome."