Rising rental yields and super changes have investors eyeing housing market: NAB survey

Improving rental yields and changes allowing self-managed super funds to buy into residential property developments have increased the number of investors looking to get into the market, although a National Australia Bank survey shows credit access remains a serious problem for developers.

NAB chief economist Alan Oster said there was a “surprising change” in the number of people planning to invest over the next 12 months, rising from 24% in December to 33% in the new March quarter survey.

Oster says while house prices are expected to go sideways over the year, with growth of just 0.6% forecast, rental yields are piquing the interest of investors – which is bad news for younger Australians supporting the ‘buyers strike’ in protest at continued strength in property prices.

“That’s one of the problems of a first home buyers strike – I’m sorry, you’re going to pay higher rents,” Oster says.

Nationwide rents are forecast to rise 3.5% in the next year and 5.2% by March 2013. The biggest gains in this period are forecast for WA (where rents are tipped to rise 4.6%) and NSW/ACT (up 4.3%).

Rental expectations are weakest for SA/NT (where a 2.9% increase is expected over the next year) and Queensland (up 2.5%).

In terms of house prices, Western Australia is tipped to lead the modest price rise over the next 12 months, with a lift of 1.1%. Growth is also tipped in New South Wales and the Australian Capital Territory (both up 0.9%), while Victoria and Tasmania are expected to deliver 0.5% price rises. Queensland prices are expected to edge up just 0.1%.

But the strength in Victoria is believed to be short-lived, with the survey tipping a 1.6% fall in residential prices over the next two years.

The survey, which looks at market conditions in the commercial and residential property market based on surveys with real estate agents and managers, property developers, owners and investors, asset managers and valuers, also found that credit access is now considered more of a hindrance to buying existing properties than interest rates.

Respondents expect one 25 basis-point rise by the end of the year.