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News: Oz hit by low vacancy rates

Mon, 09 Jul 07

Low vacancy rates are driving rent increases across the country...

Residential rental vacancies in Australia’s capital cities ranged from 0.8 per cent in Perth to 2.3 per cent in Hobart during the March quarter, the Real Estate Institute of Australia (REIA) says.

All capitals are below the 3 per cent mark considered to be a balanced rental market, with Adelaide at 0.9 per cent, Darwin and Melbourne 1.2 per cent, Canberra 1.3 per cent, Sydney 1.4 per cent and Brisbane at 1.7 per cent.

Those low vacancy rates are driving rent increases across the country and highlight the need to stimulate investment in residential property, according to REIA president Graham Joyce.

Rent increases for three-bedroom houses over the year to March were in double digits in Perth, Canberra and Darwin, and for units and townhouses in Melbourne, Brisbane, Perth and Darwin, the REIA says.

Renewed opportunity for investors

For three-bed houses, increases ranged from 1.8 per cent over the March quarter and 5.7 per cent over the year in Sydney up to 7.9 per cent for the quarter and 13.3 per cent for the year in Darwin.

Canberra is the most expensive capital city for rental accommodation, with a median weekly rent of $342.50 for three-bed houses and $325 for two-bed units.

“Rent increases are resulting in rises in rental yields and returns, providing renewed opportunity for investors in many areas,” Joyce says.

“To attract larger numbers of investors back to the property market, governments must give consideration to providing more equitable taxation treatment for property.

“The advantageous taxation treatment of other asset classes is keeping investors away from property despite improving yields and returns. This will prove to have social and economic costs – we already have a shortfall in property supply, and the situation will continue to get worse without increased construction and participation by investors.”

Source: API

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