The great “March quarter myth”: rents don’t rise at the start of year
It’s been a long-held belief amongst landlords: target the start of each year for your leases to expire and the frenzy of new tenant arrivals will get you the best rents. Over the years we’ve had landlords offer all sorts of deals to make sure their rental homes were on the market in January and February. These are seen as the busy months, the peak time to squeeze the market and achieve maximum rents. And that’s such a widely-held view that we often hear agents repeat it.
But in Brisbane’s inner-city it just doesn’t ring true to us, so we decided to analyze the stats and find out the full story once and for all. And here’s the simple findings: The start of each calendar year is the busiest but it is the worst for rent increases.
We looked back over the past 7 years of bond lodgements with the Residential Tenancies Authority and on average 31% of each year’s tenancies started in the March quarter. It’s busy and probably too busy.
On average rents drop during the March quarter (-1.2%) and the biggest growth actually happens from April to June, which is also the quietest period. The stats showed the June quarter had just 21% of the year’s new tenancy starts and accounted for an average 6.4% rent increase.
So how did we end up with this ‘March quarter myth’? Historically the universities had a huge impact on our inner-city rental market and in St Lucia for example, rents do still have their biggest jump at the start of the year (averaging 5.2% in the 7 year study compared to 2.6% in the June quarters). But Brisbane’s inner city is a much more diverse market today with tenants from all walks of life, all arriving in Brisbane at different times through the year.
There are more tenants out there looking at the start of each year. But there’s also a huge number of available rental homes and the stats show supply has often exceeded demand. Agents’ resources are stretched to the limit and despite the rush of prospective tenants some landlords overshoot the market demand and end up with extended vacancies.
It’s worth talking this one through with your property manager.
Note for the stats lovers: The RTA record the median of rents for all new bonds lodged in each postcode. We looked at the 2 bed apartment sample (by far the largest rental property category) and focused on their “City Inner” data for the 24 suburbs surrounding our CBD.