Property investors set to reap $2bn in rent

By Your Mortgage

Property investors are set to reap an extra $2bn over the next year as rising interest rates and a decline in home ownership push rents higher.

Ben White, director of property management at Ray White, believes that the predicted cash rate increase will put further pressure on investors to raise rents in an effort to offset the increasing cost of their mortgages.

"The mortgages of rental property owners are becoming more expensive, so it's inevitable that this will result in rents going up," said White. "There are around two million rental properties in Australia, and if rents were increased by around 7%, or $20 a week, that amounts to $2bn over a year."

With the RBA increasing the cash rate five times since October last year, White expects that the property market will be rebalanced in favour of investors.

"The stimulus package took some rental stock off the market, but since the expanded grant scheme was pared back there's been a return to more traditional levels of investment properties," he said.

White also noted that population growth is driving demand for investment properties, with many families taking advantage of the benefits of property investment by becoming landlords for the first time.

Predicting a significant increase in rent review valuations over the next 12 months, White believes that property managers will be "under pressure" to determine the best market rent rate.

"A property manager on top of their game will not only be working to get a property tenanted, but also help their landlords get the best rent for that property."