Rental prices rose in the final quarter of 2011 for the first time in nine months, raising hopes for an improved real estate market in 2012. National median weekly rent increased 1.1% for houses and 1.4% for units due to increased competition from buyers unable or unwilling to enter the property market. While rental growth signals a robust market, rents varied across cities, with Sydney rents rising 4.2% but falling 1.4% in Melbourne due to high unit construction. Interest rate cuts may further support rental growth and stabilize falling home prices. However, consumer sentiment remains wary due to European debt concerns clouding spending decisions.

1. Rental gains raise hopes for improved real estate market
CHRIS ZAPPONE
SLUMPING home prices and
persistently poor housing
affordability helped lift
quarterly rent yields for the
first time in nine months,
raising hopes for an
improved real estate market
this year.
National median weekly
rent for houses rose by
1.1 per cent in the final
quarter of last year, while
rents for apartments and
units rose 1.4 per cent,
according to Fairfax-owned
Australian Property
Monitors. Both measures
had been flat in the previous
two quarters.
"Increasing competition
for properties, particularly
from home buyers unable or
unwilling to enter the
property market has resulted
in rising rental prices over
the December quarter for
both houses and units," APM
senior economist Andrew
Wilson said.
The underlying demand
for affordable housing comes
after nearly a year of
softening home prices. In the
11 months to November
capital city home prices have
sunk by 3.7 per cent but rose
0.1 per cent in the month.
Despite the moderate falls in
home prices, Australian
housing is considered some
of the least affordable by
global standards. The
median home price stood at
$450,000 in November.
The quarterly rise in rents
typically a sign of a robust
property market masks
unevenness across the
capitals, with house rents in
Sydney increasing 4.2 per
cent over 2011, while falling
in Melbourne by 1.4 per cent
For the year, unit rents rose
4.5 per cent in Sydney and
2.9 per cent in Melbourne.
"It has been a much less
competitive rental market in
Melbourne than in other
capital cities," Mr Wilson
said. A wave of inner-city
unit construction, expected
in Melbourne over the
coming year, will likely cap
rents in the city.
Mr Wilson said Sydney
rents might soften slightly in
early 2012 in the aftermath of
a surge of first home buying
activity in the fourth quarter
of 2011. First home buyers
rushed to take advantage of
the New South Wales stamp
duty concession for first
home buyers, which expired
at the end of December.
Mr Wilson believes the
rate cuts will support both
rental growth and home
prices.
"The fundamentals of the
property market are starting
to reassert themselves." he
said, with the shortfall in
housing putting a floor under
further price falls and
keeping activity ticking.
Economists remain
divided about how rapidly, if
at all, the housing market will
rebound on lower rates,
given worries about the
European debt crisis
clouding the borrowing and
spending decisions of
Australians.
The Westpac-Melbourne
Institute index of consumer
sentiment, released
yesterday, rose only 2.4 per
cent in January, even after
the two interest rate cuts,
suggesting the mood of
households remains wary.
Ref: 130334025Copyright Agency Ltd (CAL) licenced copy
Age
19-Jan-2012
Page: 21
Business News
By: Chris Zappone
Market: Melbourne
Circulation: 190750
Type: Capital City Daily
Size: 156.44 sq.cms
Frequency: MTWTF--