Investors who have been waiting for positive yields may not have to wait too much longer
ACCORDING TO data released recently by Australian Property Monitors, house and unit rental prices have resumed upward growth after flat results over the previous two quarters.
National median weekly asking rents for houses rose by 1.1 per cent in the December 2011 quarter, with rents for units rising by 1.4 per cent.
While most capital cities recorded house rental rises over the quarter, Canberra was the standout performer, with rents surging by a significant 6.4 per cent.
The rise in rentals is, however, likely to be short-lived as the price cycle bottoms out and the economy starts to strengthen, according to APM’s senior economist, Dr Andrew Wilson.
“A strengthening economy will facilitate increased buyer activity in Sydney, Perth, Brisbane, Canberra and Darwin through 2012 that will take some pressure off the rental markets in these capitals,” Dr Wilson said.
In fact, there are already indications that home buying activity is picking up, with data from the Australian Bureau of Statistics showing that home loan approvals grew by 1.4 per cent in November 2011.
The data represent the eighth consecutive month of growth in home finance, a positive sign heading into 2012, according to Loan Market Group’s chief operating officer, Dean Rushton.
“The consecutive growth seen in the second half of 2011 should continue while consumers act upon repeated rate cuts by the RBA,” Mr Rushton said, adding that he expected confidence to improve after a lengthy spell in the doldrums.
The latest Westpac Melbourne Institute Index of Consumer Sentiment registered a modest increase of 2.4 percentage points in January, up to 97.1 per cent from December’s figure of 94.7.
Westpac’s chief economist, Bill Evans, described the increase as “somewhat disappointing”, following the Reserve Bank’s cuts to the cash rate.
“In effect, at this stage, the rate cuts have been unable to raise consumer confidence,” Mr Evans said.
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