Australia recorded a national vacancy rate of just 1.0% in June, according to SQM Research, which means the rental market is strongly favouring property investors.
Over the past 12 months, the vacancy rate has fallen from 1.7% to 1.0%. As a result, there is now only one vacancy for every 100 rental properties.
Extraordinarily, the vacancy rate is even lower in six of the eight capital cities.
When the vacancy rate is so low, it’s easy for property investors to find quality tenants for their property, because demand is so high.
In that kind of landlord’s market, rents tend to rise, because tenants are willing to pay higher prices to ensure they have somewhere to live.
If you’d like to buy an investment property, we can help secure finance. While prices may be softening in some markets, that could present favourable buying conditions.
Buying is cheaper than renting for 27% of homes
If you’re wondering whether it’s cheaper to buy or rent, a new report has answered that question.
It’s currently cheaper to buy 27% of homes in Australia, according to PropTrack, although the numbers vary significantly from state to state:
– Northern Territory = 98% of homes are cheaper to buy than rent
– Western Australia = 62%
– Queensland = 51%
– Tasmania = 41%
– South Australia = 34%
– ACT = 29%
– New South Wales = 9%
– Victoria = 7%
PropTrack’s analysis relied on a range of assumptions, including that buyers would pay stamp duty, put up a 20% deposit, pay a mortgage rate of 4.62%, experience capital growth of 3% per annum and hold the property for 10 years.
While PropTrack found 27% of the overall housing stock is cheaper to buy than rent, buying turned out to be the cheaper option for 31.2% of three-bedroom houses and 52.6% of two-bedroom units.
Wondering whether renting or buying would be cheaper for your personal scenario? If so, reach out and I’ll be happy to crunch the numbers for you.
How to manage your household budget in a higher-rate environment
Interest rates may be rising, but Reserve Bank deputy governor Michele Bullock is confident most borrowers will be able to cope.
Reasons for this confidence is that “household balance sheets are in very good shape”, the average household is ahead on their mortgage and most hold considerable equity in their homes.
Ms Bullock also noted lending standards have increased in recent years and to qualify for loans, borrowers had to prove they could pay “significantly higher” interest rates.
That said, with interest rates almost certain to rise further, it would be wise for households to plan ahead. Here are a few ideas:
• Over pay your home loan – deposit any additional funds in your offset account or savings account where your loan repayments are deducted. This will help build a buffer in the event rising interest rates increase your scheduled repayments.
• Reduce discretionary spending – holiday domestically, eat in, minimise transport costs, buy less ‘stuff’.
• Increase your income – work harder and smarter to justify pay increase, switch to a higher-paying job, start a side hustle, rent out a spare room in your home.
New house building activity reaches record levels
Despite a few negative headlines about construction companies experiencing financial difficulties, Australia is actually in the midst of a homebuilding boom.
A record 143,037 new house builds were started in the year to March, according to the most recent data from the Australian Bureau of Statistics.
Housing Industry Association economist Tom Devitt said the volume of detached houses under construction is almost 80% above pre-pandemic levels.
“This was driven by the combination of the HomeBuilder grant [which ran from June 2020 to April 2021] and record low interest rates,” he said.
“Even after the end of the grant, all the extra time Australians were spending at home, either working or locked down, resulted in a pandemic trend towards space and amenity.
“This kept demand for new housing and renovations elevated. Other indicators, such as building approvals, finance approvals and new home sales, continue to show a strong volume of work entering the pipeline.”
Mr Devitt said that with demand high, and supply constraints slowing down the pace of work, Australian homebuilders will be busy for the rest of this year and into 2023.
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TAG Finance and Loans
Sal Cinque | CEO
03 9886 0800 | loans@tagfinancial.com.au
Disclaimer: The information contained on this page is general in nature. Professional advice should be sought before acting on any aspect on this page. TAG Finance and Loans Pty Ltd ABN 25 609 906 863 Credit Representative Number 483873 National Mortgage Brokers Pty Ltd ABN 88 093 874 376 Australian Credit License 391209.