Investors must now refocus their attention on capital gain from property purchases after new data shows the huge rises in rents in the post-Covid period are finally coming to an end.
A new survey by industry researcher CoreLogic shows national rents rose 0.4% in the last quarter of 2024.
That’s the smallest increase since 2018.
Across 2024, rents rose 4.8% compared with 8.1% in rent pricing in 2023.
However, landlords and investors shouldn’t be feeling too sorry for themselves. Property remains a great investment, even if the market tends to be a little cyclical.
Overall, rents have increased by 36.1%, or $171 a week, since the onset of Covid. That’s a $8,894 boost of annual income, according to CoreLogic.
Renters now spend a third of their income on rent. CoreLogic says this is the highest percentage since it began tracking the rental market in 2006.
Rental growth trends are similar for houses and apartments.
Houses recorded stronger quarterly (0.6%) and annual (5%) rent rises compared with the unit sector, which registered -0.2% and 4.2% respectively.
CoreLogic says the rush-to-market by investors mid-last year increased the number of rentals available and contributed to prices easing.
It said the annual value of new investor lending increased by 26.3% over the year to September 2024.
This probably led to a “potential net increase in rental stock”.
It added: “The easing in net overseas migration was also a factor contributing to softer rental demand, with net overseas migration levels expected to normalise around pre-Covid decade averages by the 26/27 financial year.”
As any experienced investor would attest, it’s important to diversify your portfolio to limit risk. Sinking all your funds into one city can backfire.
“Many investors would normally target Sydney and Melbourne, our largest rental markets, but these cities are leading the slowdown in rental prices.”
“Their rolling annual rent growth trend eased from 9.9% and 11.0% in 2023 to 3% and 4.1% respectively in 2024.”
We recommend talking to one of our agents to get the latest rental trends in our area, and to scope out suitable properties.