Residential rents in the Illawarra are likely to increase significantly over the next couple of years unless the supply of available properties is greatly increased, an expert says.
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National property market researcher and buyer's agency Propertyology is predicting the next couple of years will produce a major increase in rents.
The group says while Australia's two biggest cities currently have a surplus of rental stock and falling rents, it's a different story for many other locations in Australia.
Propertyology head of research Simon Pressley said the rental market in the broader Illawarra region has tightened considerably since the onset of COVID-19.
In March, Wollongong had 1327 properties advertised for rent (1.9 per cent vacancy), and this had reduced to 605 properties (0.8 per cent vacancy) by the end of October.
"Conversely, greater-Sydney reached an all-time high vacancy rate of 3.4 per cent back in April last year and it maintained its rental surplus all throughout this COVID-19 period," he said.
"Kiama (0.6 per cent) has an incredibly tight vacancy rate, while Shoalhaven's 2.3 per cent has reduced significantly from 4.6 per cent in October last year.
"Over the five years ending December 2020, Wollongong's median advertised rent for detached houses has increased by a mild 6.7 per cent to $480 per week."
Mr Pressley said the current tight rental supply is placing upward pressure on rents in the region.
He said rents are now likely to increase significantly over the next couple of years.
"The only viable solution is more rental supply," he said. "And mum-and-dad property investors control 98 per cent of Australia's rental supply.
"Unless we want rents to soar by say $100 per week over the next 12-18 months, Australia must encourage greater investment in rental properties."
Anne-Marie Fishburn, property manager at the Kiama-based First National Coast & Country said with regard to the Kiama area's rental market, demand was far exceeding supply.
"It's the same with the sales - it's a lot of out of area people, that because everyone's working from home, they're all moving down south," she said.
She said there had been a spike in rental prices in the area during recent times.
"For example, a property a tenant vacated in the past few weeks, say it was $500 (per week). (It was) re-advertised for $550, and there were still plenty of applications.
"I don't think the market can go much higher (in price)... You've still got to be realistic.
"Obviously there are some landlords who are going to try and push it and get the most that they can. But I think it's reached close to its peak in terms of prices."