A cost-of-living crunch is driving a new trend among renters, altering the wish lists of some property investors. We explore the latest happenings in the rental and investment markets in Queensland, Australia especially in Townsville, Brisbane, and the Gold Coast.
Investors have been a significant force in the property market recently, with lending to investors rising nearly 30% over the year to May 2024. Part of the allure has undoubtedly been the increasing property values, which have surged 10.14% nationally since the market lows of late 2022, providing many investors with substantial capital gains.
However, successful investing also involves acquiring properties with strong tenant appeal. New research from CoreLogic indicates that renters are increasingly opting for homes with more bedrooms.
Why is this happening?
Most individuals are currently feeling the pressures of the rising cost of living, and renters are no exception. They face higher utility bills, increased costs at the checkout and petrol stations, and rising rents, which have escalated by 8.2% nationally over the past year.
Consequently, many tenants are seeking ways to reduce their weekly rent. One strategy is leasing larger homes for use as sharehouses or to accommodate multiple family members. CoreLogic data reveals that rents for homes with more bedrooms are experiencing higher increases. For example, rents for 1-bedroom units and studios have risen by 7.1% over the past 12 months, while 2-bedroom apartments have seen a 7.9% increase. Meanwhile, rents for houses with five or more bedrooms have jumped by 8.7% over the same period.
Despite these higher rent rises, it can often be more cost-effective for renters to band together and share a larger property. Nationally, the average weekly rent per bedroom in a 5-bedroom house is about $175, compared to $293 in a 2-bedroom unit or $541 in a 1-bedroom apartment.
The takeout for investors
While rents for multi-bedroom homes may have outpaced those for smaller properties, a larger dwelling might not appeal to every investor. It's not just about the higher price tag that a big house may come with. A large property with the potential to accommodate more tenants can experience greater wear and tear, potentially leading to higher maintenance costs. Additionally, 4-5-bedroom houses are often found in outer suburban areas, which may experience slower price growth compared to inner city locations.
Ultimately, investors should consider their goals when purchasing a rental property and choose one that aligns with their objectives.
Call us today
When looking to buy an investment property, finding the right investment loan for your needs is crucial. We can help. Call us today to understand your borrowing power and explore ways to finance your investment property, whether you're considering options in Queensland especially in Townsville, Brisbane, or the Gold Coast.
To learn more, contact Premium Finance Group Australia at (07) 4720 8888 or email us at finance@pfga.com.au.
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