An RP Data report this week gained a lot of media attention, advising of a rent jump in West End of 39% during the September quarter.
This is sensationalist and not correct.
Many inner-south landlords have felt first hand the truth of a market that is flat, and in some cases, slightly down.
Rents on established homes and apartments are, for the most part, not increasing. What is increasing is the number of brand new and near new property on the market for rent. Therefore, higher advertised prices than what we have seen in the past. Not higher prices on the same property. The fine detail of RP Data’s report confirms this – but was not given the emphasis it needed in the reporting!
These brand new property owners have paid a high price for these stunning apartments with city or river views. They’ve budgeted the amount of rental income they need to support the mortgage and they may not be achieving it.
In some cases this influx of brand new apartments, and not enough demand from tenants requiring luxury property, have created some vacant property on the market.
The investor with a 5 or 10 year old property around the corner cannot expect their rent to increase in these circumstances, especially if the new stock is not flying out the door.
The best measure of rents is the RTA’s report on what new bonds are lodged each quarter. And for the record in West End’s postcode in the September quarter 2 bed apartments dropped 2.2%. Read our Market in a Nutshell report for West End.
Tenants want new, modern, spacious apartments with air conditioning and off street parking but if there are loads of apartments to choose from they’ll quite frequently attempt to knock down the price and try new negotiation techniques on the property manager!