Sydney apartments rents going up

It is February, 2007 and the inner city rental crisis continues.

After years of little of no rental / capital growth in Sydney real estate, particularly apartments, it looks as if the tides are now turning. Sydney apartment vacancy rates, and rentals in general are approaching all times lows. According to the Real Estate Institute of Australia vacancy rates are around the 1.5% mark.

Low rental vacancies provide a sydney apartment owners with the confidence to put up rents, which has a flow on effect. Each year as rents are reviewed by agents and landlords, steep increases in sydney apartment and other sydney rentals are expected.

Increases in Sydney rentals, some predict between 10% to 25% should lead to increased demand for inner sydney apartment investments, driving up capital returns that have been sorely missed by investors for a number of years.

As new rental stock can take years to redevelop or build, prices may be on the increase for the next two to three years.

Smart money may well be going into residential property now, as the Australian stock market continues its fourth consecutive year of impressive growth.

As greed continues in the stock market, the ever increasing chance of a 'correction' or 'factor x' increase. By factor x we are referring to the potential for increased political instability in the middle east, i.e. USA declaring war on Iran etc or similar. These could have drastic implications for consumer confidence both here and in the US. This could cause a real melt down in world equity markets in the short and medium term.

As equity markets witness a mass exodus, investors and cashed up individuals shall again seek other forms of investment such as direct property, where they can see the bricks and mortar of their investment in the form of a Sydney apartment for example.

To make superior returns, you must be selling shares when everyone else in buying and be prepared to invest in out of favour sectors. At the moment everyone is still gung ho for the stock market.

It could be time to lock in some fixed rate loans and start snapping up Sydney apartments.

What do you think?