Its the start of 2017 and the outlook for tenants is fairly grim. With vacancy rates sitting at a low of 2.4% during December 2016* it’s not looking like it will improve anytime soon.
January is usually a busy time for rentals, it’s the start of a new year people are moving interstate, overseas up-sizing, downsizing the list goes on. So what’s happening now, why are we not seeing the typical vacancy rates in Melbourne that we usually do at this time of year?
A few things have changed, the number one thing is that people are looking for houses. We could find you an apartment fairly easily however a good quality three bedroom house in Melbourne is being snapped up in record time. Last week we had one open for inspection of a three-bedroom house, and four application forms later and the property is gone.
Secondly, the rise of AirBnB is pushing the number of vacant properties to an even lesser level, in Sydney the number of whole houses/apartments on AirBnB is greater than the number of rentals on the open market according to the recent findings from the Urban Housing Lab at the University of Sydney*.
The reason for this is the Landlords can get higher returns for the short stay and holiday makers but it’s only going to push the price for a genuine rental property up more and Tenants will feel the squeeze. It’s only a matter of time before this trend continues here in Melbourne.
Take into consideration all of the above factors and Tenants that have a house are staying put, it might not tick all the boxes, they might well be outgrowing it, but given the open market they might just be onto a good thing with a reasonable rental rate and not having to spend every Saturday morning searching for their new home.
Landlords aren’t complaining however, low vacancy rates and consistent rental income is a win-win. It’s no wonder they can be selective when choosing from a variety of Tenants minimizing the risk of choosing the wrong Tenant. The bar is set high and Tenants as a whole are much more reliable than in previous times.
We are always interested in hearing your thoughts so please feel free to comment or get in touch if you would like to discuss the best way to maximize your investment property.