Why Are Residential Rents Skyrocketing

As an Accounting firm we have had dozens of clients quit the property investment market due to increased compliance and rising costs.

According to CoreLogic figures released recently, residential rents in Victoria have increased 9.8% in the 12 months to July 2022.

This is despite property valuations dropping 2.0% over the same time frame.

Rents are going up because:

• Compliance costs for electricity, gas & other have added     between $10 and $15 per week to landlord costs
• Depreciation benefits all but gone for existing homes,     significantly reducing negative gearing benefits
• Land tax has just about tripled due to recent valuations (this is a     time bomb when the next land tax notices are issued by State Government) –     Value Creep
• Interest rates have increased
• Low vacancy rates
• Airbnb shifted traditional rental properties to holiday rentals

All the above is pushing investors out of the market and it is a supply and demand issue.

Blind Fredy could see rents would increase.

The next issue on the horizon is not enough housing due to less investors, so the government will need to step in with more public housing.

Population immigration growth has been slow. What will happen if the population increases – a bigger rental problem or property crisis.

Our prediction: A rental property shortfall crisis is on the horizon.