My Take on the 2019 Rental Market

17/12/2018

This late in the year it’s now most likely that a lot of property owners, unfortunately, will be seeing their properties sit vacant over the Christmas period until significant numbers of prospective tenants hit the streets in mid-January and onward.

This is not from a lack of trying as seeing first hand, properties being offered with incentives such as rent-free periods and some significant rent reductions offering good value to tenants that are willing to move just before Christmas or start their year off with a pre-planned move. I’m also noticing properties listed for Lease with multiple agents, prospective tenants notice that too and sometimes find that a bit off putting.

Come 2019 several new high density developments are set for completion and continuing development will be adding onto an already constant and ample level of supply.

Tenants typically have the rental market in December but mid to late January and into February typically does see an increase in demand for properties.

My thoughts are that we’ll see a slower than usual January with only properties with the best offerings and value for tenants being snapped up first.

Predicted Growth Areas / The one’s to watch:

Several suburbs are being eyed as the ones to watch in 2019 for both an increase in rental demand and interest from investors, touching on a few of these areas where we manage property there are also other suburbs being closely watched on the North Shore, areas such as Brookvale and Millers Point.

-Eveleigh

+ Carriage works developments

+ Growing and evolving Commercial Technology Park with several notable occupants

+ Proximity to Arts / café scene i.e. Erskineville, Newtown & Redfern,

+ Ease of access to transport & the CBD

-Waterloo

+ New Apartments

+ Danks Street precinct

+ Metro / Train line under construction (Raglan & Cope Streets)

+ Proximity to CBD & Airport Access

-Maroubra

+ Affordability where compared to Coogee & Bondi

+ Beach side lifestyle

+ Gentrification continues

+ Access & infrastructure improvements in the works

-Breakfast Point

+ Walking Tracks, Parks on the Waterfront

+ Quality development of well designed communities

+ Easy Ferry commute along the Parramatta River

What do I see ahead for the New Year?

  • Amendments to the Residential Tenancies Act coming into place, read what this means for you in my Tenancy Reforms Blog Post. Changes will impact tenants, owners and agents alike and change the way many of us do business and what we as Agents and Owners offer to tenants
  • Reforms and changes to licensing rules and training requirements for Registered and Licensed Real Estate Agents
  • Very slight rent increases with more owners opting to secure and retain good tenants, owners will be more conscious of minimising vacancy and prioritising keeping their tenants’ content especially considering more flexibility for tenants to be able to Break their leases down the track and fluctuating vacancy rates
  • New rental supply from developments nearing completion in growth areas such as Mascot and Green Square which will see rents in these areas flatten out due to competition
  • Increase in Vacancy Rates due to new apartment development stock
  • Landlords holding onto their rental properties and holding back from selling where they can buffer for vacancy and rents that aren’t increasing
  • Influx of first home buyers which could spell and increase in investors as well as tenants moving to purchasing in a down Sydney market. A third of first home buyers are said to be rent-vesting instead of buying their first home.

And with certainty, much media hype about the doom and gloom of the Sydney Property Market so definitely a lot of attention will be focused there throughout the year. So in that regard nothing is unchanged from 2018 🙂

As the New Year and its cycle take us where they will, there’ll always be the need to navigate through new legislation, ensuring compliance and working through an ever-changing rental market and I’ll keep on blogging about it all.

Next year i’ll be bringing you some new blog posts regarding Depreciation Schedules, yields and return on investment and hope to have some guest bloggers on board from the world of finance and buyers’ agents in the New Year as well as well as some worthy content to my clients in my E-Newsletters.

What do you want to read about though?

If you have any suggestions as to what you’d like to read about in 2019 feel free to reach out, I am always open to thoughts and suggestions!

Best Wishes ahead of the festive season and thanks for your following this year 🙂

Antonio

Sydney Rental Market Update – November 2018

21/11/2018

Meet the Market, Instead of Testing It

Within the last week I’ve read conflicting reports about the state of Sydney’s rental market one quoting vacancy rates are down and the other stating the opposite. So what am I and fellow Property Managers seeing on the front line?

Amidst the doom and gloom of a weakening Auction Clearance rates and Median sales prices, for Property Managers of late it’s been business as usual when considering this time of year typically does slow down in terms of availability and lettings.

Looking at the Inner Sydney Market Vacancy rates:

November          2017 – 2.1%

August                2018 – 2.9%

September         2018 – 2.4%

And most recently October 2018 upwards to 2.8%.

So whilst this is a fluctuating market we are at the end of what is typically known as a property boom especially in the Sydney and Melbourne markets.

Despite all of the negative media attention (doom & gloom) I remain quite positive about the assets we manage within Sydney.
There is always a fair bit of hype surrounding vacancy rates but look at the supply that’s coming to the rental market but remembering that the type of supply is not typically suited to all. We still have tenants wanting character filled terraces and art-deco style apartments over new, off the plan high density housing.

Speaking with other Property Managers they feel that properties that good quality properties with attractive features are leasing and especially where the rents reflect the market.

In terms of rents I personally haven’t carried out any increases or tested the market when re letting simply because the market isn’t reflecting an increase. In these cases, it’s seen that minimising vacancy is the highest priority with clients wanting to meet the market instead of testing it. From my conversations with other agents, many are not reviewing or recommending rent increases for current tenancies.

In many cases, first hand and as discussed with other Property Managers, properties can take a week or two longer to lease but it’s not all about dropping rents. Investors can still thrive in this market where logical decisions are being made and the agent does all that they can to ensure every opportunity has been explored.

Just as it is in the sales market, it’s not all about putting a property on the market and opening the door, agents must work harder and go out of their way to achieve results.

A good test of the Sydney rental market and vacancy rates will be in the New Year where rental properties are typically in higher demand, we just need to get through the festive season and later judge if 2019 can bring about any rent increases, otherwise it might be best not to rock the boat.