The homeowner and rental markets are starting to swap places, with home sales and prices cooling as rental demand and rents take off. Rising mortgage rates have started to bring housing demand down, and we expect they will rise further over the next couple of years. Higher interest rates will also help cool rampant house price inflation, with month-on-month gains now starting to ease. However, we don’t think house prices will see outright falls and coupled with tight credit conditions that has shut out first-time buyers and pushed them to the rental market. Net apartment absorption saw a large rise in Q3, and multifamily rental vacancy rates are at 38-year lows on some measures. Alongside strong earnings growth that has led to a rapid recovery in rental growth. In turn that has driven strong investor interest in apartments and boosted total returns.
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