
According to the TPN Credit Bureau, the consecutive rate increases are expected to put a brake on the growth of property values. However, there is good news for well-positioned properties, as they are likely to experience improved rental returns. Why? Because more and more households are opting to rent these days, leading to a surge in demand for rental properties and driving rental escalations.
Factors implicating the market:
- Slower Property Value Growth: With interest rates on the rise, the TPN Credit Bureau predicts that the growth of residential property values might slow down a bit. These hikes tend to make potential buyers a bit cautious, which could result in a decrease in the rapid rise of property prices. The silver lining for investors out there is that it could be a great opportunity to snag properties at more stable prices.
- Improved Rental Returns: If you happen to own a well-positioned property, you might be in for a treat. As more households are leaning towards renting rather than buying, the demand for rental properties is skyrocketing. And guess what? That means better rental returns for you! Tenants are on the lookout for attractive, conveniently located rentals, so make sure your property stands out from the crowd. A little investment in maintenance and upgrades can go a long way in attracting those desirable renters.
- Renting is Trending: Renting has become quite the popular choice for many people. Why? Well, renting offers flexibility, it saves you from the burdensome costs of homeownership, and it aligns with the evolving preferences of today’s demographics. With this shift in mindset, the demand for quality rental properties is soaring high. It’s a fantastic time for property owners and real estate investors who have well-managed, appealing rental properties.
- Rental Escalations: Prepare for rental escalations, as they are on the horizon. As the demand for rental properties rises, tenants may find themselves facing fierce competition and limited options. That puts you, the landlord, in a sweet spot. You gain more leverage to adjust rental prices in response to market dynamics.
The interest rate hikes have set some changes in motion in the residential property market. Property value growth might slow down, but well-positioned properties can still enjoy improved rental returns. Zahir Vallie, property mogul and CEO of Z-PROP stated, “If you’re a property owner or investor, it’s time to adapt and cater to the evolving needs of renters. Make your property stand out, and you’ll find yourself riding the wave of success in the rental property sector.” With more households opting to rent, the demand for rental properties is soaring, leading to rental escalations.