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Rise in returns from US rental properties

Buy-to-let properties in the US continue to provide excellent returns for investors with the highest growth in rent for six years. Among the areas in the US showing the highest returns are three Florida cities with Orlando rentals seeing the biggest rise nationally.


The latest survey from Axiometrics, a rental market research company, shows that US rental prices for April experienced a year-on-year rise of 5 per cent, the highest level for April since Axiometrics started to track monthly rentals in 2009. The 5 per cent growth confirms this year’s tendency for more expensive rentals. Over the last three months, rents have gone up by at least 5 per cent. In terms of quarterly rates, those in Q1 were at their highest level since 2011.


Analysts pinpoint the improved employment market as one of the main factors behind the rise in rentals. Some 3 million jobs have been created in the US over the last 12 months and unemployment has dropped to 5.4 per cent. With higher household wealth, more families are searching for a home with rental properties their preferred option in many cases.


Robust rental market

“The fact that rents are rising at 5 per cent a year points to an extremely robust apartment market,” said Stephanie McCleskey, Vice-President of research at Axiometrics, commenting on the April survey. She highlighted that the absorption of new supply because of higher employment has represented an excellent opportunity for buy-to-let investment in the US.


Occupancy of rental properties in the US is also at a high rate – 95.2 per cent nationally in April, slightly higher than March and one of the highest levels since April 2008. For Axiometrics, full occupancy is around 95 per cent and April’s figure points to a market where rental properties are in short supply. “In essence, the national apartment market is in need of even more new supply and overall, the outlook is strong for the apartment industry,” McCleskey said.


Highest growth areas

California dominates the list of the top 50 markets showing the highest rental rises – 8 locations in the state occupy positions in the first 17 markets. Florida also features as a location with rising rents with three cities in the top rankings. Orlando rentals went up by 6.7 per cent year-on-year, those in West Palm Beach by 6.4 per cent and rentals in Fort Lauderdale rose by 6.3 per cent in the year to last April. Deltona also featured with a growth of 9 per cent. Orlando’s figures were particularly impressive, boosting the metro area from 15th to 10th position in the national ranking.


All Florida cities in the ranking registered full occupancy rates. Orlando, West Palm Beach and Fort Lauderdale all reached levels of at least 95.5 per cent. In Deltona, the number of occupied rental properties reached 96.5 per cent of the total.


Source: Axiometrics

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