Investors must have profited billions for years yet it seems that 2016 wants to show them that the world is round.
A threatening real estate downturn is about to hit the investors in Australia as tenants seem to give way to the post-boom rental market in Melbourne and Sydney, Reb Online reports, dubs such condition as "significant pain for investors."
Todd Hunter, buyer's agent from wHeregroup, commented that the older homes will become less competitive than the new ones and that investors shall now be forced to compete with new house and lot packages.
Hunter also relates that the number of investments in the outer suburbs of Melbourne and Sydney and their strong price gains the past years had given tenants wider options.
According to Hunter, a number of tenants prefer newer homes located in two suburbs further from the country's capital as they want to avoid living in established homes just around the city.
It seems that the ever-booming commercial real state in Melbourne and Sydney can only threaten tenants because of the prices that have increased significantly, not to mention a number of new housing stock arriving the market. This increase in prices and new houses may mean "big money" for investors yet they didn't know how much pressure these have placed on rents.
"In these cities like Sydney and Melbourne - which is very generic, we're talking about two capital cities here, there's lots of markets within those markets - you're seeing prices that have increased significantly, you're seeing lots of new housing stock come onto the market and that all puts pressure on rents," Hunter said.
According to him, those investors in the western suburbs of Sydney can also be affected with this new real estate competition.
"In that sort of western Sydney [area] you've got new land releases, you've got investors who are paying an absolute premium for new house and land packages, and then, because so many are coming on the market, they're realising they can't get the yields that they were getting, so they reduce the yields," Hunter further said.
Reportedly, Hunter was able to comment that way after realizing that Australian rental market rate had only increased by 0.3 percent in 2015 which is a very low rate compared to the country's rental market growth back in December 1996 as per CoreLogic RP Data.
