Property Rental

Australian landlords have seen the highest annual growth in dwelling rents since January 2009.

But very high rental growth is unsustainable while income growth remains subdued, CoreLogic&#39;s Eliza Owen has advised.

&ldquo;I think we can expect a similar outcome for the Australian rental market as the purchasing market.&nbsp;

&quot;Very high rental growth is unsustainable while income growth remains subdued.&nbsp;

&quot;The result will likely be more subdued growth rates in the coming quarters, especially as investor participation trends higher, delivering more rental supply,&rdquo; Ms Owen said.

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CoreLogic&rsquo;s Rental Review for the June 2021 quarter shows despite rental growth slowing over recent months, the latest figures take national rental rates 6.6% higher over the year.

CoreLogic&rsquo;s national rent index recorded a 2.1% rise in the three months to June 2021, down on the 3.2% rise over the March quarter.&nbsp;

National gross rental yields were recorded at 3.41% in the June quarter, down from 3.55% over the March quarter and 3.73% a year earlier, as dwelling values outperform rental growth.

Regional rents continued to outpace capital city rents, rising by 2.7% in Q2 compared to a 1.9% rise in capital city rents, both down quarter-on-quarter, the highest annual growth result on record, with the CoreLogic rental index commencing from 2005.

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CoreLogic&rsquo;s Head of Research Australia, Eliza Owen, says Australia has not seen rental value increases this high for over a decade.&nbsp;

&ldquo;Following subdued rental performance through much of the 2010s, the Australian rental market has seen an increase in values due to many of the same factors that have led to the current housing price upswing.

&quot;These factors include increased government stimulus through COVID-19, accumulated household savings through lockdown periods, the swift economic recovery seen as restrictions eased, and a lack of rental supply in some markets have also exacerbated rental price increases, particularly in major centres of regional Australia.

Despite the strong national and combined regional figures, the change in rents over the year ranged from 21.8% growth in Darwin, to a 1.4% decline in Melbourne.&nbsp;

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Canberra remains the most expensive city to rent, with Adelaide the most affordable.

&ldquo;In Sydney and Melbourne, unit rents continue to show year on year decline, at -1.1% and -6.4% respectively.

&quot;As noted in previous quarters, these cities, which have historically had the highest intake of international migrants, have seen rental demand most impacted by international border closures amid the pandemic.&nbsp;

&quot;Although demand across these unit markets remains fairly subdued, there are signs that rents may be stabilising at lower levels.

&ldquo;In fact, Sydney unit rents have begun to creep higher in recent quarters, including a 1.8% uplift in the three months to June.&nbsp;

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&quot;Melbourne unit rents have also started to show signs of stabilising, with values remaining flat over the quarter.&quot;

Melbourne recorded the weakest growth in rents over Q2. House rents were up 1.1%. Unit rents saw no change over the quarter, but showed a minor rise in the month of June of 0.3%.

&quot;Recent lockdown conditions across Sydney may impact rental markets where there are high concentrations of renters in affected industries, such as hospitality and tourism.&quot;

These regions include the inner city market of Sydney, which has been one of the more subdued Sydney rental markets through the pandemic.

Ms Owen says there are pockets of the rental market which remain subdued, because of the impacts COVID-19 has had on different parts of the country


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Very high rental growth is unsustainable while income growth remains subdued: CoreLogic's Eliza Owen

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Rental demand for units is 23% higher year-on-year, according to the latest data from the realestatwe.com.au website.

Demand for house rentals is up by 11% on the same time last year, just as the worldwide pandemic became official.

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"Perhaps somewhat surprising given the current environment, but demand for units is 23% higher year-on-year with demand for houses up by less than half that, at 11% growth," Cameron Kusher, the executive manager of economic research at REA Group said.

This year the rental demand has fallen for five successive weeks.

<img alt="" height="1376" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/rea_rental_demand.jpg" width="1600">

The reasons Kusher advised on the emerging trend was "that we aren’t seeing the influx of overseas arrivals like we typically would at this time of year, as well as the fact that government incentives have driven a surge in purchasing activity from first home buyers, which may lead to reduced rental demand."

Rental demand fell by a further 1.1% last week, taking it to be 15.8 per cent lower than its historic peak.

Cameron Kusher said Tasmania and Australian Capital Territory were the only states in which rental demand increased over the past week.

While rental demand has trended lower over recent weeks, it remains 17% higher than it was a year.

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After the seasonal early-January surge, two weeks ago Kusher noted demand would continue to trend lower over the coming weeks "as we exit the busiest time of the year for the rental market during the first quarter."

The REA Insights Rental Demand Index was relaunched last month.

While the original index measured the total volume of highly-engaged renter activity on realestate.com.au, it now measures the change in the number of people that are highly-engaged with properties listed for rent on realestate.com.au.

Someone is determined to be ‘highly engaged’ when they undertake a number of actions on a listing, these include but are not limited to; the number of visits to a listing, looking at the photos for a listing multiple times, saving the property, sharing the property and/or making an enquiry with the agent.
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Rental demand has now fallen for five successive weeks, after the seasonal early-January surge, but remains higher than last year, according to realestate.com.au data

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Rental demand reducing, but remains higher than last year: REA

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EXPERT OBSERVER
Amid an extraordinary economic slowdown, the Australian economy is heading for its first recession in almost 30 years.
Indicators suggest this fall in demand is starting to weigh on the property market. But a frequent stream of monetary, fiscal and social policies are being rolled out in an attempt to soften the blow to the broader economy, which will also help to insulate housing markets.
Over March, the JobSeeker payment was increased by $550 per fortnight, effectively doubling the highest allowance. Additionally, on the 30th of March, a $130 billion wage subsidy payment was announced, which would see employers receive $1,500 per employee per fortnight.
For eligible employers and employees, workers would receive a gross wage supplement of $1,500 before tax on a fortnightly basis.
The game-changing package has led Westpac economists to reduce their forecast for peak unemployment from 17.0%, down to 9.0%.
This will ultimately lessen downward pressure on housing demand, as more people are able to retain their job during and after the COVID-19 shutdown.
How many rentals are ‘affordable’ on the JobKeeper package?
The JobKeeper subsidy may also see fewer households fall into housing affordability stress.
Housing affordability stress is a situation where households expend more than 30% of income on housing costs, such as rent. To understand how many households may be better off, it is worth considering how many rentals are currently able to be serviced on 30% of the JobKeeper payment.
<img src="https://www.urban.com.au/images/2020/4/6/TABLE%201.png" alt="">
Table 1 (pictured above) shows the portion of the rental market in capital city and regional areas that could be serviced by an individual using just 30% of the JobKeeper or JobSeeker payments (i.e, what portion of the rental market can be rented for $450 per fortnight, or $330 per fortnight).
In considering typical household composition, Table 2 (pictured below) reflects the same analysis for a couple both receiving a benefit.
<img src="https://www.urban.com.au/images/2020/4/6/TABLE%202.png" alt="">
The analysis does not take into account tax on the JobKeeper payment, or voluntary employer top-ups of the JobKeeper amount.
The data highlights that the JobKeeper payments significantly increase the portion of affordable private rentals in Australia.
Flat payments are proportionately beneficial for renting households where rents are cheaper, such as in Regional Tasmania and South Australia.
Incidentally, these are areas that may be more severely impacted by the economic slowdown in terms of the concentration of the labour force in agriculture, food service, tourism and accommodation.
But even with the relatively small portion of rental properties being affordable elsewhere, it is likely that current social distancing measures would see less discretionary spending, enabling a higher portion of income to be used in servicing rent.
Additionally, further protections for renters are in the works. On the 29th of March, federal and state leaders announced a 6 month moratorium on residential and commercial tenant evictions, for households in financial stress who cannot meet payments because of the coronavirus impact.
At a press conference the next day, Prime Minister Morrison made an allusion to further rental assistance, such as a rent guarantee, but such details were “still being worked through”. This would ease pressure on renters to service their full rent commitments, however the impact on landlords remains uncertain. Another note on this data is that it reflects rental valuations as of early April.
As income and job prospects decline, the private rental market will likely see a downwards adjustment, with landlords of vacant properties potentially having to lower rents in order to meet the market.
A final takeaway from this data may be that now is an opportune time to explore more social and affordable housing supply.
As well as added benefits to the construction sector, the government could look to create housing supply that compliments the payments being offered to renters. 
ELIZA OWEN is the Head of Research Australia at CoreLogic
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New fiscal policies shift outlook for rental housing: Eliza Owen

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<img src="https://counter.theconversation.edu.au/content/76263/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
For renting to become a truly viable, long-term alternative to home ownership, greater rental affordability and security is needed.
Deloitte Access Economics’ Chris Richardson recently suggested that young Australians would be better off renting than trying to buy a house. He argued:
… rents today make a lot more sense than housing prices.
This may be true. However, the situation for renters is far from clear-cut. Rents continue to increase in Australian cities, and are out of reach for low- and very-low-income earners.
Renters also face substantial housing insecurity. In Australia, 50% of renters are on a fixed-term one-year lease; 20% are on a month-to-month “rolling” lease. 
For renting to become a truly viable, long-term alternative to home ownership, greater rental affordability and security is needed.
Rental affordability
Longer-term structural changes to tackle housing affordability, including boosting the supply of social housing and increasing tenure diversity, will be essential. There are some promising moves, including the recently announced proposal for a bond aggregator model to fund social and affordable housing.
Failing a substantial increase in affordable housing, there will be a need to increase rent assistance payments, particularly in high-cost regions. 
This acknowledges that housing costs differ across the country and that many low-income earners need to remain in high-cost regions. This includes older people whose social and family networks are in these regions, and people who work in these areas.
Many industries in high-cost cities are dependent on people who earn low and very-low incomes. These people have a right – and need – for affordable, secure housing – and a house that is a home.
Affordability is the thin end of the wedge
For renting to become a true alternative to home ownership, greater rental security is needed. 
To move toward secure rentals we need to reward long-term investment. One example might include encouraging institutional investors, including superannuation companies and other businesses that invest in large amounts of rental housing, who are in it for the long haul.
However, there is no reason to assume that institutional investors will offer more affordable rental properties, or be any better landlords than so-called “mum and dad” investors. We therefore need to pursue changes to rental laws to ensure renters, including the growing generation of long-term renters, can experience a secure sense of home. Specific changes include:
Removing no-grounds eviction. The perceived risk of eviction leads to stress for renters. And the right to no-grounds eviction can lead to retaliatory eviction by landlords when tenants exercise their rights, including rights to maintenance and repairs.
The Tenants’ Union of NSW has called for a balancing of landlord and tenant interests through tenancy laws that specify reasonable grounds for termination.
Such laws could follow the German example. In Germany, rental laws ensure security of tenancy while retaining the right of landlords to terminate a lease in certain circumstances, such as if a tenant violates the lease agreement (for example, by not paying rent) or if the landlord requires the property for personal use. 
Rent increases are sometimes a “backdoor” way of evicting tenants. In a recent survey, 11% of renters reported receiving a “rent hike after requesting a repair and 10 percent said that their landlord or agent became angry”. We need stronger regulation of rent increases and stronger penalties for unreasonable increases.
There are precedents for this in other jurisdictions. Germany again provides a great example. There, rent increases are allowed less frequently. And they:
… must be based in the rents of three similar dwellings or a database of local reference rents and rents may not increase more than 20 percent over three years. 
Ensuring the right to make a home. Rental laws need to ensure the right of tenants to make their house into a home, including making cosmetic changes to a property, ability to keep pets, and allowing alterations that would allow an older person or person with a disability to live there.
Some older renters I have interviewed recently have had to move after these types of adjustments were rejected by landlords who thought age-related modifications were not attractive.
In New South Wales, the right to make changes that would ensure a property is liveable for people with different housing needs is being considered as part of the current residential tenancy law review. However, the right to make cosmetic changes is excluded.
Popular wisdom often suggests that tenants and landlords have different interests. In fact, they have very similar interests. Both benefit from secure tenancies and a property that is well maintained and cared for.
Failure to ensure rental affordability and security will require a raft of policy changes in other areas, including pension income calculations that assume home ownership. It will also condemn a generation of long-term renters to increasingly unaffordable and insecure housing.
Emma Power is an ARC DECRA fellow based in the Institute for Culture and Society at Western Sydney University. She can be contacted <a href="https://theconversation.com/profiles/emma-power-250930">here</a>.
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For renters, making housing more affordable is just the start: Emma Power

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<div style="text-align: left;" align="center">Rental property technology company Property Connect Holdings Limited (ASX:PCH) has started trading on the Australian Securities Exchange after raising $2.5 million as part of a reverse takeover by Conquest Agri (ASX:CQA).</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">The company first traded at $0.06 per share, a 20% premium to its listing price of $0.05, said a media release.</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">Property Connect issued 50 million shares, implying a <a href="/news/50306-rental-tech-firm-property-connect-set-to-list-on-asx" target="_blank">market cap of A$12.28</a> million upon listing.</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">Trading will commence as Conquest Agri before the name change to Property Connect, and the PCH ticker, comes into effect pre-market open on March 24.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Property Connect's LiveOffer™ technology allows potential tenants to make an offer on a rental property, thus creating a fair market value for properties.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">The renter can adjust the rent paid, move in date and lease term which helps leasing agents get market-driven terms on each property.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">LiveOffer™ can be integrated into existing property management software and will allow renters to place an offer on a property and see in real-time where they are placed against other applicants. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Initially, Property Connect will target the vast US multifamily apartment market with additional real estate sectors and markets anticipated to follow. The company is targeting organisations with more than 5,000 properties (multiple communities) under management and has agreements in place for LiveOffer™ with groups accounting for more than 100,000 apartments under management.</div>
<div style="text-align: left;">
 Property Connect will charge a set-up fee and monthly fee for each community placed on the LiveOffer™ system by the property manager, in addition to a 1-3% transaction fee per lease passed through the platform.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">"Listing on the ASX is an important milestone in the company’s development and we look forward to delivering a technology platform that will allow property managers to optimise the leasing process and maximise property value,” said founder and CEO Timothy Manson.</div>
<div style="text-align: left;">
 Version 2.0 of LiveOffer™ is expected to be launched in the second-half of this year. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;"> </div>
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Renting tech firm Property Connect debuts on ASX at 20% premium 

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Demand for three bedroom rental properties is pushing up the weekly median rentals around Melbourne’s Bayside.
Investors in Cheltenham benefitted the most from this demand with the median weekly rent for a three-bedroom apartment increasing 13.3% over the year to $510 in June 2015, new REIV data shows.
Large family homes in neighbouring Beaumaris are also highly sought after by tenants.
Three-bedroom apartments there recorded annual rental growth of 11.1% to a median of $750 per week, up from $675 for the same period last year. 
The REIV data suggested three-bedroom homes in Hampton saw 9.8% growth over June 2014 figures to $725 per week.
The median weekly rent for the same sized property in Highett also grew to $510 in June, up from $480 last year - a 6.3% increase.
The median rent for a four-bedroom home in Brighton increased 7.3% to $1,288 over the year while one-bedroom apartments grew 7% to $356 per week. 
Rental increases were also recorded for two-bedroom properties in Brighton East. The weekly median rental for a two-bedroom apartment in Brighton East grew by 10.5% to $450 while rent for the same sized house was up 10% to $450. 
Other suburbs experiencing rental growth across the municipality included two-bedroom apartments in Black Rock, up 6.1% to $425 in June and four-bedroom homes in Sandringham, up 8.7% to $950 per week. 
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Bayside Melbourne rental growth with strong demand for three bedders

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Bupa Australia has taken a rental lease at Newspaper House, the seven level retail and office building at 247 Collins Street Melbourne.
The iconic Newspaper House was purchased in June <a href="/expert-insights/investing/42933-newspaper-house-collins-street-sold-to-subdividing-singaporean-investor" target="_blank">for around $23 million</a>. 
The lease includes 275sqm of space leased at more than $800,000 per annum on an eight year term through an off-market deal brokered by Savills Australia and Vantage Property Investments.
Savills’ Victorian Retail Director, Michael Di Carlo said the lease was brokered off-market prior to the new landlord having completed settlement.
Bupa will relocate from The Block Arcade at 292 Collins Street. 
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