Rate rises could hit renters harder than home owners
Renters already face a dire shortage of accommodation, with vacancies at rock-bottom levels, and now it’s predicted that many investors will try to pass onto them all, or some, of the extra cost of having a mortgage.
Last week the RBA lifted the cash rate by 50 basis points to 0.85 per cent in its second rise in two months, with more predicted to follow in a bid to slow the rapid rate of inflation. “I think they could find their rents going up as a result of the rate rise, particularly in areas of Sydney or Melbourne or anywhere across Australia where the rental situation is dire,” she said.“If you factor in the borders reopening too, that could further fuel demand for rental places, and we might see more investors moving their properties away from residential tenancies and back to short-term platforms like Airbnb as tourists come back.
“If the investor needs the cash flow to repay their mortgage, they may be very sensitive to rate rises and want to pass on the extra costs,” she said. “But if they’re already negatively geared, then they might not be so fazed by the rise.“Certainly, those tenants who are coming to the end of their leases will be at greater vulnerability to higher rents.”
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