According to economic forecaster BIS Shrapnel, renters will have to get used to annual increases of between 5 – 7% in Perth, Brisbane and Sydney, 3 – 5% in Melbourne, Hobart and Adelaide over the next 24 to 36 months. BIS Shrapnel analyst Angie Zigomanis said new dwelling construction had not been adequate over the past 12 months and expect rental growth to pick up again. Housing analyst have forecast rent to rise across all Australian capital cities as new home construction fails to keep up with demand, home borrowing stabilises at weaker levels and population continues to grow.
For obvious reasons, many renters choose to live in popular inner city suburbs which are close to public transport, amenities, shopping with lifestyle. These choices have enabled inner city precincts to record strong growths compared to areas which are further away from CBDs.
On the other hand, there are pockets within inner city areas in many capital cities which have been “over-shadowed” by their more illustrious neighbours. Suburbs such as Narraweena and Wareemba in Sydney are only a hop and jump away from its more well-known neighbours of Dee Why and Drummoyne. A couple of strategies in dealing with rising rents may be to locate these inner city pockets with good public transport links and amenities which have been ignored time and again. Another strategy is to look a little in suburbs which may be a little further but still enjoy good transport links into the city. It is important if buying into these suburbs which offer relatively more affordable entry points and cheaper rent to ensure they have a strong track record of growth.
The important criteria is these suburbs MUST have recorded growth rates of at least 12% over the boom in the last 18 months and an average growth rate over the last 10 years of not less than 10% per annum. Suburbs which did not experience significant growth over the last 18-month boom is indication the suburb is short of important growth drivers such as transport links, distance from CBD, public amenities and conveniences such as schools, hospitals and universities and general public appeal.
The reports above identify key investment propositions such as emerging trends, new infrastructure developments, private investments in emerging suburbs and puts its capital growth rates and records to the test.