While bad news for renters the good news for landlords is that rents are growing faster than home prices leading to better yields.

The latest NAB sentiment survey, which polls property industry professionals, predicts rents will grow by 3.5% in the next 12 months and 3.8% nationally in the next two years.

CoreLogic Research Analyst Kaytlin Ezzy says rental yields are bouncing back.

She says nationally during the September quarter dwelling yields grew by 24 basis points to 3.57%.

Although yields are now above the record lows recorded in February (3.21%) they are still well below the pre-pandemic decade average of 4.24%.

Ezzy says with interest rates expected to continue rising throughout the first half of 2023, putting downward pressure on house prices, it’s likely yields will continue to improve.

“Once interest rates have stabilised, higher yields coupled with lower values and stronger buying conditions, could entice more investors to enter the market, which would ultimately help raise rental supply.”