Property Management Know How from Australia’s Best

Part 2

 
Median Weekly rentals all around Australia

Ever wondered how to find the median weekly rental for your area of interest?

Each state and territory has a govenment website covering 'housing' or 'residential tenancies', where all of the residential leasing laws are available for investors' information, and some also provide current data on median rents, updated quarterly.

Check out the links given in Table 1, as well as the many resources at http://renos.com.au/links/.


Table 1 : Median Weekly Asking Rentals for Houses, Sept Qtrs 06, 07,08 for Capital and major cities.

 
More Questions Answered

We asked Rob (Perth) , Karen (Brisbane), Alex (ACT) and Carolyn (Melbourne) and Naomi (North Sydney) about the rental market in their local areas, and here's what they had to tell us.

What did you see happening in the rental market last year in 2008?

Alex (ACT):  "January through April was hectic hectic hectic! People were almost “bidding” for properties as we had such a shortage and they were paying the highest median rents in the Country in Canberra. Winter certainly saw things cool off and although it picked up slightly towards October/November, we didn’t see the same activity as the same period the previous year."

Carolyn (Mel): "There were fluctuations in the market in 2008 and I saw properties that leased in 2007 which were more difficult to lease in 2008. Demand was reasonably high for rental properties and for properties that were well priced and good value, it was easy to lease a property to a quality tenant.

I also saw an increase in people renting out their expensive homes to rent a home themselves in a cheaper area. In general, a great Property Manager will give you sound advice and in any market, good or bad, should be able to assist you to get minimum vacancy, great tenants and good returns."

Karen (Bris): "2008 was probably the most buoyant and yet turbulent year in my rental history.  We saw staggering rental increases in the first half of the year, "bidding wars" at open for inspections and rapid rental increases putting tenants into rental distress.  The second half of the year saw a "dramatic shift" in the rental market with demand slowing and rents stabilizing as a result of the economic climate."

Rob (Perth): Rob told us that after dramatic rent increases of around 27% in the calendar year of 2007 and a shortage of rentals in Perth, resulting in  an all-time low vacancy rate of 0.8% for Qtr1 2008, the shortage soon diminished as 2008 continued, with the vacancy rate quickly returning to its' long term average of 2.8%.

As the sales market reduced in 2008, sellers who couldn't sell, put their property back on the market for rent, resulting in a good supply of rentals.  By the 4th quarter of 2008, the growth in the median Perth rental had plateaued.

Naomi (Nth Syd): "At the beginning of last year, 2008, the rental market was particularly strong. The demand for properties was noticeably high and vacancy rates were very low and as a result rents increased. Existing tenants were willingly accepting rent increases as they did not want to vacate their current residence and face the uncertainty in a tight market of finding alternative accommodation.

It was noticed that prospective tenants would arrive to inspections well prepared with all relevant personal documentation to ensure their application was at the top of the list! Towards the end of 2008 some relief was given to tenants as interest rates were reduced, easing the pressure on landlords to offset their mortgage.  This also saw the upward movement in rentals plateau."

How do you see the current state of the rental market?

Alex (ACT): "Expectations in Canberra are high as we were achieving such high rental incomes, things have certainly eased off and we are now educating investors that they may not be getting the same increases as they had enjoyed for the last 12-24 months. There is still plenty of movement but it is taking a little longer to secure a new tenant."

Carolyn (Mel): "It does vary from area to area and we are predominantly focused on the Bayside area & South Eastern corridor. Our market is strong across the board, but I would definitely NOT call it a ‘frantic’ market which it has often been reported as being in the media.

I feel that quality properties which are well maintained and are priced in accordance with the market will lease very quickly (1 – 3 weeks). Landlords who are unrealistic will continue to see their property sit vacant for longer periods if the property is over-priced or just doesn’t represent ‘value for money’."

Karen (Bris): "The last quarter data indicates that the rental market is showing signs of easing. There has been a softening in the demands to increase rents in both the housing and unit rental market. In the short term, there may be further moderation in the demands to increase rents because of the recent reduction in interest rates, and the looming slowdown in world economic growth."

Rob (Perth): Rob explains that the rental market in Perth is now clearly a 'two-tier' market.  The outer suburbs have adequate supply of rentals and rent prices have plateaued and in some cases softened.  The inner and middle suburbs are still under some pressure, experiencing strong demand.  Rob says that some rental increases in this tier may be seen in the next 12 months.

Naomi (Nth Syd): "On the Lower North Shore executive rental properties, in the vicinity of $1000 per week and above are taking longer than normal to rent. This noticeable change in the market is due to companies reacting to the current economic climate, restricting the contributions or allowances towards the accommodation of employees.

Vacant properties of this calibre are crucial to the income of the rent roll and obviously to the landlord.In the past month the number of tenants vacating has increased. This could be influenced by reduced interest rates and the enhanced First Home Buyers scheme coupled with the easing of property prices which is enabling more people to purchase property."

What are your thoughts on the year ahead?

Alex (ACT): "It’s so early to tell, certainly hoping for a bit more buzz but has been slow to kick off this year."

Carolyn (Mel): "I feel that the market will continue to remain strong whilst there is uncertainty in the economy. Falling Interest rates alone will not necessarily see everyone running out to buy a property when there is ‘fear’ of job losses. In my opinion, we will see strong growth in the number of rental properties on the market but Landlords need to be aware that some tenants may struggle to pay their rent if they are affected by the downturn in the economy.

Agents will need to be diligent in the screening of tenants to ensure that Landlords best interests are maintained and agents will also need to keep tabs on their ‘arrears’ because once tenants fall behind in their rent by a couple of weeks or more, it could potentially be the beginning of an issue.   Communication is the key between Agent, Tenant & Landlord!!"

Karen (Bris): "Vacancy rates will remain at a historical low with a tight rental market, due to a number of factors the main one being 1^st home buyer’s snapping up properties at the lower end of the market.

As rents increase over a certain $ value, we are finding some tenants deciding to enter the first home buyers market when rent paid equals mortgage payments.  With the decline in our economic growth, I believe that tenants will request longer leases to avoid the cost of having to move."

Rob (Perth): Rob believes that what happens in the year ahead depends upon population growth in the Perth area, and the economy.  If the population grows, there could be up to 10% growth in rentals, but if the workforce experiences a loss of jobs (due to economic factors) and a continuation of the softening of the market then the area is likely to see rentals stagnate.

Naomi (Nth Syd): "With little growth in property prices forecast for the year ahead there are concerns that investment in property may decrease, reducing the availability of more rental properties on offer to rent. This will of course increase the demand for rental properties and may also see rents fluctuate to account for this change in the market."

If you would like to get in touch with any of our featured Property Management Experts, please send an email to info@renos.com.au.