Rents easing as housing affordability improves

Improved housing affordability is enticing more people into the housing market and taking pressure off the rental market.

The Real Estate Institute of New South Wales (REINSW) said last Friday the percentage of available properties in Sydney jumped to 1.5% in April 2009, a monthly increase of 0.3%.

“Overall, the rental vacancy rate for Sydney is now at its highest level since August 2007,” said REINSW president Steve Martin.

Mr Martin said the first home buyer boost was resulting in many people buying their own home and consequently freeing up rental stock. The REINSW’s figures coincide with wider indications that weekly rents are easing.

Tim Lawless, national research director at RP Data, said on Friday that growth rates for weekly rents were starting to level due to decreasing rental affordability, causing many renters to purchase a home instead of renting.

Housing affordability has improved dramatically off the back of interest rate reductions and softer house prices.

The HIA/CBA First Home Buyer Affordability Index recorded a 14.6% improvement in the first quarter of 2009, on top of a 40 per cent improvement in the fourth quarter of 2008. Mr Lawless said gross rental yields were likely to peak over coming months.