FORGET mortgage stress; rental stress is set to become an even more crippling financial malady over the next three years with rents to soar by 30 per cent.
According to new research conducted by BIS Shrapnel, the cost of renting in most Australian cities is predicted to rise much more than the cost of buying property between now and 2011.
A report, Residential Property Prospects, 2008 to 2011, forecasts the cost of renting will increase by around 10 per cent per annum in the coming three years due to an undersupply of new housing.
Study author Angie Zigomanis said rising interest rates and a shortfall in the construction of new dwellings is pushing rental prices higher and higher.
“We’re not building nearly enough houses. At the moment we need to be constructing around 180,000 dwellings a year, but we’re only building around 155,000,” he said.
“That’s well below what’s needed and it shows up in lower vacancy rates in the rental market,” he said.
The report predicts that the growth in Sydney’s median house price will increase by 18 per cent over the same three-year period - less than the rise of 10 per cent per year predicted for rental prices.
According to the report, most of the growth in the Sydney market is predicted to come after 2009-2010, when credit conditions improve and increased rental costs encourage investors to reconsider the property market.
In both Melbourne and Adelaide the median house price is predicted to increase by a cumulative 16 per cent over the next three years.
Perth - where house prices peaked in December 2006 - is forecast to experience only a 9per cent gain in the median house price over same the three-year period.
BIS Shrapnel forecasts that Brisbane will see the strongest growth in the median house price to 2011, with prices forecast to rise by 22 per cent, followed by a 21per cent gain in the median house price in Darwin.
But even in the country’s northern cities the average cost of renting is set to rise more than the cost of buying property.
Over the weekend, auction clearance rates continued to to be sluggish in all capital cities.
In Sydney, only $80.6 million in property changed hands at auction, compared to $162.5 million over the same weekend last year. In Melbourne, the auction clearance rate was 54.5 per cent, down more than 23 per cent from the same time last year.
Adelaide also recorded a 26 per cent slump in the auction clearance rate, compared to the same weekend last year.
In Brisbane, $8.9 million in property was sold at auction, significantly down on the $16.6 million sold this time last year.
Source: theaustralian.news.com.au
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