Interest Rates to Push Rents Higher

Recent interest rate rises are likely to trigger widespread rent increases as demand for residential property grows and landlords move to recoup added loan costs, property research and investment firm Braxton Chase said today.

Braxton Chase estimated that in order for landlords to cover increased loan costs in the wake of the latest 0.25 percent interest rate rise: • Rents on properties worth $300,000 would need to increase by about 4.8% ($12 per week, assuming current weekly rent of $250); • Rents on properties worth $500,00 would need to increase by 5.6% ($25 per week, assuming current weekly rent of $450) • Rents on properties worth $750,000 would need to increase by 6.2% ($40 per week, assuming current weekly rent of $650) These increases are on top of general rental increases, averaging more than ten percent annually.

Braxton Chase said although more principal buyers would be turned off by higher mortgage repayments, the market would still feel upward pressure from investor purchasers seizing better yield and capital growth opportunities.

“The interest rate rise isn’t great news for principal buyers, but it’s the latest in a series of positive developments for investors,” Braxton Chase CEO Andrew Donnelly said.

“The current climate of rising interest rates, tightening rental markets and land shortages continues to make the residential property market attractive to investors. "

“There are currently good investor markets in many regions across Australia, particularly down the eastern sea board where capital growth is about to awaken after a long slumber. “Investors hungry for the double bonus of good yields and capital growth can do very well, provided they buy well-located stock and do their research.”

Http://www.braxtonchase.com.au