The statistics are in and it’s looking like a difficult year ahead for landlords. Thanks to the boom in new apartment buildings throughout Melbourne, rental supply is now outstripping demand and it’s causing rental rates to stagnate.
As construction of apartments and new housing estates continue at record levels, the demand for rental properties is falling behind. CoreLogics January Rent Review shows no growth to capital city rental markets over the past year and dwelling rental growth at its lowest point on historical record. Unfortunately this doesn’t look to change in the short term with supply continuing to increase and rental prices expected to stay down over the course of the next year.
CoreLogic has tracked annual rental changes since 1996 and over that time, rental conditions have never been weaker. At the same time last year, rental rates had increased 1.7 per cent, highlighting that the slowdown in rental conditions has been sharp over the last 12 months.
There are a number of factors causing this. The increasing number of tenants leaving the rental market to become first home owners and a surplus of rental options are causing a competitive environment for tenants but causing vacancy rates and rental yields to suffer for property investors. As the number of rental properties in the market increases, we’re having to adjust our landlords expectations to suit a more competitive rental environment.
Some key tips:
- If your property is tenanted, try to avoid it from becoming vacant.
- If your property is vacant, you may need to do a bit of work to the property to attract tenants away from the others on the market. A fresh coat of paint and new carpets can make a big difference on how long your property stays on the market.
- Price the property aggressively to attract tenants to your property