Renewed investor activity fuels growth in Australia's challenging rental market

This is happening in an environment where high rents are slowing down the rate at which rent can increase. However, a persistent shortage of rental properties has still led to a significant rise in rental values, with a national increase of 30.4% since the start of the pandemic.

Interestingly, this surge in investor interest is happening despite rising interest rates, which usually make property investments less attractive. The number of investors taking out property loans is still much higher than before the pandemic, even though there was a small drop at the end of 2022.

Adelaide is especially drawing the attention of many investors, thanks to its remarkably low vacancy rate of only 0.4% (CoreLogic 2024). As a result, Adelaide's average rental yield is 3.93%, surpassing those in Melbourne and Sydney, where yields fall below the national average (CoreLogic in 2024). Adelaide has also seen significant rent increases in the past year, with a 6.7% rise for houses and a 9.8% increase for apartments.


Despite the current challenges in the rental market, including rising rents and pressure on renters across Australia, the recent spike in investor interest is a hopeful sign. In the short term, the rental market remains tough, with the availability of rental properties expected to stay low and high rent levels likely to persist. However, renewed interest from investors is likely to bring relief to renters. By increasing the supply of rental homes, this is the most effective method to slow down escalating rents. Additionally, this investor engagement is set to stimulate new construction, which will slowly but surely begin to rebalance and stabilise the rental market, offering a more hopeful outlook for the future.