Investors buoyed by rent freeze rejection
Property investors who had been eagerly awaiting news on potential rent freezes and caps are breathing easier after the government ruled out resorting to such measures to address the rental crisis.
At the National Leaders Summit held in Brisbane this week there was a unanimous decision by the Federal Government and state governments that there would be no rental freeze.
As is already the case in most states, with Western Australia a significant outlier, there will be a limit to one rent increase a year.
It was essential to get clarity around this as soon as possible. Potential investors in the market were somewhat nervous about the prospect of a two-year rent freeze and were sitting on the sidelines waiting to get clarity around what that meant.
The rejection of rental freeze should offer great comfort to all investors.
What real estate has proven in recent years, is that it is the safest and most secure form of investment in Australia.
Most investors who have held their property for five or more years are astounded by the returns their real estate investment has provided.
For most, there has been significant increases in rent and while they have also had that matched with some increases in rates, insurance premiums, body corporate levies and more recently interest rates, they have been able to offset those with increases in rental returns.
A majority of landlords would say they are getting their best returns in more than 15 years.
But so often we look at residential investment as a yield only and forget there has been incredible capital growth over the last three or four years. Marry the two together and there is simply not a better investment for the mums and dads of Australia who are risk adverse and would like to largely have a set and forget investment.
Rent crisis to push rents higher
As we know we have a rental crisis throughout the country.
The crisis is, there is significantly more tenants than there are rental properties.
With the forecast of another 1.5 million people migrating to Australia over the next five years, that crisis is only going to get worse, which equates to more upward pressure on rentals and better returns for investors.
Add to that the same sort of shortfall in properties for people to buy and we are going to continue to see strong growth in property values.
With inflation eating away at interest-earning deposits with the banks and the poor returns they are offering, that is not a great alternative. Share market volatility is a nervous proposition for many.
And so, for safety and security and to be assured of return in investments, real estate is the stand out option.
