What is more painful?

What is more painful?


Your arm being hacked off with a blunt butter knife, or being a tenant in Dulwich Hill?


Just ask any tenant in Dulwich Hill, where last year the average 2-bedroom unit rent was increased by 30%. Now that’s got to hurt!


If you think it has been a painful experience for the tenants, let’s spare a thought for the owners. Anyone who has owned freestanding or attached houses over the last 5 to 8 years in Sydney has seen their value almost double in that time, whereas anyone who bought an apartment, is likely looking at the same valuation today as what they paid for it.


But wait there is more. If you are an investor, you rely on the rental income you collect to help pay your loan on that property.


If you own an investment property, you have seen very little rental growth over the last 7 years. In Sydney over the last 7 years, rents have only risen a tiny 8%. And that’s after the massive jump we have seen in the last year. However, I am betting this is all about to change in a big way.


Sydney is experiencing a severe shortage of apartment rental supply. A recent CBRE analysis estimates that fuelled by strong population growth, rental demand is expected to climb by 34,100 apartments next year, but only 15,300 will be available.


In our opinion, Sydney apartment owners are about to have their time in the sun, in a huge way. We are forecasting substantial rental increases to continue, which will in turn make owning residential units in Sydney more profitable.


Just as many unit investors are giving up and selling their investment property, their timing could not be worse. As the old saying goes, its darkest just before the dawn.


Kiril Ruvinsky