Be warned: there is a rental boom coming to Sydney
During the recent Sydney boom, many Australians were worried about not being able to buy a property, as housing unaffordability rose considerably.
To curb the price rises, towards the end of last year the Australian Prudential Regulation Authority (APRA) introduced new lending restrictions for property investors, making it slightly harder to gain finance.
In response, many lenders have changed their serviceability requirements and increased interest rates on investor loans.
This has affected investors, who are now finding it harder to gain new loans on their properties, stabilising the market slightly and allowing home buyers to snap up some "affordable" properties.
Sounds like a reasonable plan, right?
Unfortunately, it appears that renters may be the ones most affected by these changes.
Considering some banks have upped interest rates on investor loans, this means that investors are already passing on the cost to renters by increasing rents. But that's not all.
There is a rental boom coming to Sydney. Rents have not moved since 2008-10 levels but property prices have doubled.
The population of Sydney is growing consistently. With the APRA changes, investors are finding it harder to get into the market, meaning supply and demand will be off balance. This adds to the already significant rental shortage in Sydney.
We are slowly starting to see rents creep up, and I expect we'll see a full-blown increase in the next 12 to 24 months. This is great news for investors but less so for already stretched renters.
As housing affordability becomes more and more out of reach for regular Sydneysiders, rents will naturally increase because more people will be forced to rent (so there will be more competition in the rental market), as has been evident in previous property cycles.