State of the Property Management Market
Rental homes are in high demand but the type of rental that is sought after is shifting. As the real estate market adjusts, more Victorians are renting for a longer amount of time, and the idea of the traditional renter is changing.
Last August, the Real Estate Institute of Victoria reported the rental vacancy rate was the lowest it has ever been at 1.6 per cent, and has only slightly increased to 1.8 per cent as of January 2019. Rental homes are in high demand but the type of rental that is sought after is shifting. As the real estate market adjusts, more Victorians are renting for a longer amount of time, and the idea of the traditional renter is changing.
People lease homes for all sorts of reasons, whether they’re relocating to Melbourne for work, on a temporary contract or they’ve sold a large family home and renting as a stop gap. Some people are renovating the family home or waiting for something off the plan to be built. For others renting is a lifestyle choice. Even the traditional ‘house share’ arrangement has changed shape.
‘Some sharing renters have more money and are renting larger and more expensive homes, and we are seeing more downsizers entering the rental market,’ says Marshall White leasing manager Felicity Edwards.
Certain types of property are performing particularly well as rental homes. Property manager and team leader Anthony Wiseman says family homes renting for between $850-1000 per week are in high demand, as are all properties between $350-700 per week, some leasing within just a week.
A certain standard of maintenance is essential to securing and retaining good tenants. As people are renting for longer, they, especially families, want to commit to homes that will serve them long term, Anthony explains.
‘Tenants are now wanting to live in well maintained homes, usually with air conditioning,’ he says. ‘Owners must maintain their properties well to a standard where they would want to live in them themselves in order to attract tenants.’
Properties with recently updated kitchens and bathrooms, freshly painted interiors and new or almost new carpets are performing well in the rental market as well as lock-up-and-leave style apartments.
‘Owners must maintain their properties well to a standard where they would want to live in them themselves in order to attract tenants.’
There are a wide range of opportunities available for investors looking to move into the rental market, says Marshall White Projects director Mark Dayman. New areas of Metro Melbourne are being developed and recent projects include townhouses in Ringwood, Boronia and Sunshine.
‘We anticipate that the investor market will be more active now than it was 12 months ago, due to the downturn of interest in the Australian market from overseas investors,’ he says. ‘Local investors are now returning to fill that gap.’
Anthony advises investors to be mindful of market fluctuations when purchasing a rental property, particularly those bought off the plan.
‘When the market is flooded with homes from a new development, the properties that are being leased first are those that are priced the lowest. Investors may need to initially take a lower rent, then try again at a higher rent when there is not so much demand.’
Any adjustment to the property market in terms of sales trends also has a knock-on effect to the rental market. Some owners who have not successfully secured a buyer within their desired timescale may choose to rent their home out instead as a viable alternative. This can lead to more choice for renters.
Many factors affect the rental market however and supply does fluctuate for many unique reasons. The rental market is not as transparent as the sales market due to results not being reported in so much detail week in and week out. It’s advisable for tenants and landlords to do their own research in the particular area in which they hope to rent or purchase.
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