Rent Jumps Predicted

Major property industry groups are claiming rents will increase by up to four times what the Federal Government is predicting as a result of changes to Property Investment Taxes.

Master Builders Australia, the Property Council of Australia, and the Real Estate Institute of Australia have released new modelling which they say shows that the Federal Budget’s housing measures will cause rents to rise by $9 a week – not the $2 per week the government is predicting.

Market analysis by FoundIt predicts rent rises in some locations could be as high as $50 per week within 12 months.

The property technology and research platform’s analysis says there is already existing momentum in rising rents and this will be compounded by a supply shortage and rising interest rates as investors put up rents to recoup costs.

It says changes to negative gearing and capital gains tax are likely to cut back on the number of investors buying property, creating a smaller market for rentals.

The latest Market Insight report from realestate.com.au also warns of higher increases. REA Group senior economist Angus Moore says that by restricting negative gearing and the capital gains discount to new builds, new rental supply may not be added where it is needed most.