Rising rental yields to boost investment appeal in 2009

According to RP Data, the industry could see investors return to the market by mid to late 2009 as rental yields continue to increase. RP Data said a lack of supply and falling property values are working to push yields up on investment properties.

The valuations group also expects rising population growth to exacerbate the housing shortage in Australia.

“The implications of fewer dwellings being constructed for investment purposes and fewer existing properties being purchased, is that the shortage of rental properties is likely to continue,” RP Data senior research analyst Cameron Kusher said.

Mr Kusher said this would be particularly evident in capital city areas where vacancy rates are already below two per cent, such as Sydney, Melbourne, Brisbane and Adelaide.

“The bi-product of these rental increases will be continuing improvements to gross rental yields. These improvements in yields may also be enough to encourage investors back into the market in mid to late 2009, particularly those investors that are driven by yield rather than short-term capital growth.”