Property News Australia.com.au

Building approvals fell more than expected in August and the lack of building will force rents and house prices higher amid a lack of supply, AAP reports.

Building approvals fell 1.7 per cent to 12,751 units in August, seasonally adjusted, from a downwardly revised 12,974 units in July, the Australian Bureau of Statistics said today.

Over the year to August, building approvals fell 0.1 per cent.

UBS senior economist Adam Carr said housing construction was below national needs, and would drive up housing costs.
Higher rents and house prices would likely to add to inflation and force interest rates higher, Mr Carr said. He predicted interest rates would rise again in February, after nine rate rises in just five years.
APM’s general manager Michael McNamara told news.com.au that rents would continue to rise.  “Weekly asking rents in all capital cities are at record highs,” he said.

Although the climate was giving renters little relief, it was a good time to be investing in the property market as returns were growing, Mr McNamara said.

“Increasing gross rental yields are expected to drive stronger property markets in the eastern capital cities, especially in apartment markets,” he said.

“Investors will see stronger investment fundamentals as a reason to prefer property as an asset class”.

The research also found low rental yields in Perth meant its property market was Australia’s most over-valued, with returns on the year a meager 3.7 per cent, the lowest of all capital cities.