Rent

EXPERT INSIGHT

The national residential vacancy rate fell from 2.1 per cent to 1.9 per cent in April.

But these figures mask some serious variances across the country.

CoreLogic has already reported rents turning vertical in some markets, and now SQM Research is seeing the same.

This will eventually feed into inflation figures (although the ABS uses a measure of all rents, not just newly let properties, which will dampen the inflation impact a little).&nbsp;

Sydney&#39;s vacancy rate fell to 3.1 per cent in April, now well down from 3.9 per cent a year earlier, and gradually tightening. And Melbourne saw its vacancy rate drop from 4.4 per cent to 4 per cent in April as confidence returns in the city economy.&nbsp;

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There are still relatively high vacancy rates in the CBD markets as offices remain only half full, while tenants have often eschewed density over the past year.

SQM believes that household sizes have declined, as people shun living together in groups through the pandemic, which intuitively makes sense.&nbsp;

Almost everywhere else rental markets have tightened dramatically.&nbsp;

Brisbane&#39;s vacancy rate fell to 1.4 per cent from 2.8 per cent a year earlier, and every other capital city is now very tight at under 1 per cent.&nbsp;

Some of regional markets have reached crisis point.

I&#39;ve seen it first hand in Noosa, while SQM noted that the Gold Coast and north coast of New South Wales have often seen rental price hikes of about 30 per cent for houses.

Some parts of Perth are seeing the same.&nbsp;

This again goes to demonstrate how &#39;macro&#39; figures are only so useful for property market participants.

Immigration is effectively &#39;switched off&#39; at the moment, yet many rental markets are now feeling the pain of the preceding credit squeeze on investors, with rental supply approaching crisis point.

ACT case study

There was a bit of a debate some years back, where I suggested to a few economists that Canberra&#39;s property taxes would lead to spiralling rents, making Canberra the most expensive place in the country to find a rental.

My contention was essentially thus:

<ol>
	<li>Economists say property taxes won&#39;t lead to rent increases</li>
	<li>Property taxes ratcheted up apace</li>
	<li>Rents spiral</li>
	<li>Economists say record high rents are actually because of something else</li>
</ol>

Or something like that anyway.&nbsp;

COVID-19 threw in a major interruption to normal service last year, but now the double digit increases for Canberra&#39;s asking rents are hoving back into view.&nbsp;

In September 2014 the median asking rent for a house in Canberra was $465/week, while today it has increased to $690/week and now looks set to spike much higher on SQM&#39;s data series.&nbsp;

As such Canberra will take out the title as most expensive capital city in which to rent this year, eclipsing Sydney and Melbourne, although the jury is still out on the role of property tax.&nbsp;

Asking rents for units increased more modestly from $370/week for $490/week over the same time period, although one suspects that data series has partly been skewed higher by the relatively high number of new units constructed in the nation&#39;s capital.&nbsp;

The national residential vacancy rate fell from 2.1 per cent to 1.9 per cent in April.

pwargent

Large rental price increases across property markets: Pete Wargent

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Once again we need to ask the question: where in this nation of "chronic housing shortages" is the rental growth?
The latest Rental Report from Domain Group records virtually no rental growth in the capital cities in the September quarter. And, in annual terms, rental performance ranges from weak to nothing to negative.
The report covers the rental market for houses and for apartments in each of the eight capital cities. That's 16 rental markets in total, and in the past 12 months half of them have recorded falling rents or no growth.
The best performance in an Australian capital city is in Hobart, according to these figures, with a 4% rise in the median asking rent for units and a 3.3% rise for houses. That's a very anemic result, but it's the best in the nation apparently.
If you believe the constant rhetoric from the developer lobby, Sydney has the nation's most serious shortage of housing – yet in the September Quarter the median rent for houses did not change and the median rent for apartments fell 1%.
In annual terms, house rents in Sydney have grown a meagre 2% and apartments rents 3.1%.
The position in all the other capital cities is weaker than that.
Perth's rents have dropped around 6% in annual terms for both houses and apartments. In Canberra, the median rent for apartments is down 5% and for houses it's dropped 2.7%.
Darwin is down 2.9% (houses) and 1.8% (apartments).
Overall it's a very pallid performance and one that's inconsistent with claims of "a chronic housing shortage crisis", one that apparently demands urgent action from government.
The federal inquiry into the non-existent housing affordability problem, the one that is based on an Australian Bureau of Statistics miscount of first-home buyer numbers, is being fed a series of wish lists from groups representing builders and developers.
The common theme is that if you give developers everything they've ever wanted, they'll go away and build lots of dwellings and affordability will be miraculously transformed.
Economists, journalists and other commentators across Australia have bought the "chronic shortage" storyline and so it's accepted as fact by many people.
But there's a lack of evidence to support the idea and plenty of data that suggests the claim is nonsense – including rental performance.
The performance of rents has been so poor, yields have fallen in virtually every capital city market in the past 12 months. Only Hobart has managed to lift rental returns.
I continue to believe that the most pressing issue for markets around Australia is the opposite one, one of emerging over-supply in key locations.
Terry Ryder is the founder of hotspotting.com.au. You can email him or contact him on twitter.
 
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terryryder-YECXbqmri2

If there's a housing shortage, where's the rental growth?

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EXPERT OBSERVER
While media obsesses over price data as the only market measure worth talking about, the forgotten barometer is residential rentals.
Not only does mainstream media misunderstand and misinterpret median price data, but it largely overlooks the fundamental importance of what’s happening in the rental markets of our major cities. 
Vacancy rates and rental growth figures are important because they’re often a pointer to future rises in dwelling prices.
Before Sydney got on its growth path with price rises, it had a couple of years of strong growth in rents. Hobart, currently the price growth leader in capital city Australia, also had notable growth in rentals before prices started to rise. 
According to the latest SQM Research figures, Hobart still has the lowest vacancy rate among the cities and it’s still delivering significant rental growth alongside the price growth - still rising in double digits, according to some (but not all) research sources).
This is a pattern that, according to the research, is common - rents rise before prices do. This makes patterns with vacancies and rents worth noting.
So I’ve looked at the latest rental data from two key sources, Domain and SQM Research.
The market leader is a toss-up between Canberra and Hobart. This makes sense when you understand that these two cities have stood out for the past couple of years as the places with the tightest rental markets, both with vacancy rates well below 1 percent.
In the national capital, both Domain and SQM have house rents rising between 8 and 9 percent in annual terms, while apartments rents are up 7 percent (Domain) or 5 percent (SQM).
In Hobart, the two research sources agree that rents have risen markedly for both houses and apartments, but the numbers are quite different. Domain has rents up 11 percent for houses and 9 percent for apartments; SQM’s growth figures are 5 percent for houses and 14 percent for units.
So it’s pretty clear-cut. Canberra and Hobart have been the leading cities for low vacancies and strongly rising rentals.
But what is the third-ranked city in those terms? The answer is the city no one (other than me) ever talks about, Adelaide.
Adelaide’s vacancy rate has been hovering around 1 percent, according to recent SQM figures. Some sectors of the Adelaide market, such as the City of Marion, have vacancy rates closer to 0.5 percent.
And recently the SA capital has been producing solid rental growth figures. Domain records annual growth of 4.2 percent for houses and just under 2 percent for apartments, while SQM reports around 3 percent for houses and 3.4 percent for apartments.
Adelaide’s growth seems fairly moderate but, to put it in perspective, the two research sources have Sydney rents stagnating or falling. SQM, for example, has Sydney house rents down 3.6 percent and apartments falling 1.2 percent in annual terms.
In Brisbane, where vacancy rates have been high (although now trending downwards), rents have been fairly stagnant over the past year.
In Darwin, where vacancy rates have been elevated for several years, Domain has house rents down almost 4 percent and SQM records a reduction of close to 6 percent.
Domain records no change in Perth rents for both houses and apartments, although SQM suggests house rents are showing early signs of a return to growth - which would correlate to steadily improving figures on vacancy rates.
Melbourne’s rental data is moderate only, with both sources suggesting rises of 2-3 percent in the past 12 months.
So where do the vacancy/rental trends point us, in terms of predicting future growth in prices. I would suggest the best answers (particularly when considered alongside other evidence) are Adelaide, Canberra and Perth.
Canberra has very low vacancies and strongly rising rents. It also has a strong local economy and rising sales activity. Its price growth, currently solid but moderate, should improve. The top end of the market is already rising.
Adelaide has low vacancies and improving rental growth. It also has an improving local economy and a busy sales market. Price performance, already strong in the million-dollar suburbs, should escalate.
And Perth, where rents and prices have been falling in recent years, is poised to rise. Its vacancies are trending steadily downwards, there’s evidence of rising leasing activity and the first signs of a return to rental growth. As the state economy improves, sales activity is steadily rising - and price growth is already happening in the top end suburbs.
Terry Ryder is the founder of hotspotting.com.au
<a href="mailto:%20&lt;script%20type='text/javascript'&gt;%20%5Cn%20&lt;/script&gt;&lt;script%20type='text/javascript'&gt;%20%20&lt;/script&gt;This%20email%20address%20is%20being%20protected%20from%20spambots.%20You%20need%20JavaScript%20enabled%20to%20view%20it.%20&lt;script%20type='text/javascript'&gt;%20%20&lt;/script&gt;"></a><a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
 
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Top three Australian cities for rental growth and lowest vacancies: Hotspotting's Terry Ryder

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Planning how to rent out an off the plan apartment is similar, if not the same, to other forms of property investment strategy, however some developers may offer a rental guarantee on the new purchase.
Developers generally offer a rental guarantee for the first year or two, however many property professionals warn against buying into a development that offers a rental guarantee.
iProperty Plan director Mark Armstrong says by accepting a guaranteed rent level, investors are insulated from market forces.
“As newer properties come on to the market and tenants have a wider choice of places to live, the market rent for a property could fall,” says Armstrong.
Market analyst <a href="https://www.urban.com.au/guides">Catherine Cashmore</a> says the rental guarantee is always factored into the sale price of the apartment.
Cashmore says rental guarantees can be between 5% to 7%. If an investment has a gross return of 6% and the developer guarantees $300 a week rent, the purchase price would be $260,000.
But if the market rent is in fact $250 a week, the property is really worth $218,000, resulting in investors paying 19.2% over the market value.
“Once the guarantee expires, the unit’s yield will revert back to market forces,” says Cashmore.
Armstrong says once the guarantee expires, investors will need to have sufficient cashflow to hold the property during periods when the property is not tenanted.
Property 1 real estate agent Garth Rothwell says rental guarantees are good for overcoming fear of loss due to a vacancy period but in reality, all rents are guaranteed.
“I guarantee there will be people willing to rent a unit, it just comes down to how much rent they are willing to pay.
“Guarantees that are offered by the developer and are above market value are bound to fail, as proven in the past, as they are unsustainable over the medium to long term.
“Rent guarantees based on market value for a period of one to three years can be beneficial for investors to overcome the fear factor and help the investor with cash flow in the initial years of the purchase,” says Rothwell.
“Ultimately it comes down to how the rent guarantee is funded.”
Off the plan apartments can be advertised for rent prior to settlement but Rothwell says the investor will require the developer’s permission to advertise early, as the developer will have to authorise access to conduct inspections.
“If the unit is leased prior to settlement, the developer is entitled to the rent collected prior to the settlement date.
“If a guarantee is in place, the developer will already have this process in place,” says Rothwell.
For investors wanting to rent out their new apartment, Rothwell advises to price the unit at market value, not emotional value.
“Investors should be prepared to trade off $10 to $15 per week in rent to get a better tenant sooner, or alternatively a tenant with a small pet may pay more.
“The investor needs to identify the type of tenant they wish to attract, familiarise themselves with relevant facts regarding pets, body corporate rules and on site management,” says Rothwell.
Rothwell advises that a pre-purchase/settlement inspection is organised from a licensed building inspector and that a detailed initial inspection report is completed.
“Complete all guarantees for stoves, ovens, dishwashers and air conditioners and ensure a landlord’s insurance policy is in place to cover loss of rent due to malicious damage and a basic contents policy to cover any dispute about building or contents,” says Rothwell.
As with any property investment, research is the key to ensure the numbers add up and that all the correct measures are taken to safeguard investors and their property.
{rsform 49}
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ntrotman-Et3xWpamVh

How to: Rent out an off the plan apartment

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EXPERT OBSERVER
High-intent renters are still very active on realestate.com.au, despite a softening market and relatively high supply.
The REA Insights Weekly Demand Index is a weekly metric that looks at the volume of high-intent renter activity on the realestate.com.au website and app and tracks that activity over time.
Specifically, it looks at how users are behaving when they interact with live rental listings.
The characteristics of serious renter activity includes but is 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.
Who is it useful for?
For renters looking for new rental accommodation the index gives a good indication of the level of competition they can expect when they look at and apply for properties. Higher renter activity on a listing would suggest greater competition for that property or property type. In this index we’ve aggregated the high-intent rental activity and analysed it by state.
For owners of rental properties the index indicates the likelihood that they will be able to rent out their property.
Why REA Group is well placed to tell this story
Realestate.com.au is Australia’s number one property portal. In April 11.9 million Australians visited the platform* creating an unparalleled view of consumer demand for Australian property. This vast onsite activity sends millions of signals of intent that allow the experts at REA Insights to model behavioural demand.
What is the latest data actually showing?
The latest data shows that the number of highly-engaged rental listing interactions on realestate.com.au increased by 2.7 per cent last week. That means that serious renter activity has now increased for 10 of the past 11 weeks (falling the previous week) and is up 102.9 per cent from its low in March. The 2.7 per cent weekly increase did not completely offset the -4.3 per cent fall the previous week.
One of the likely drivers of such high volumes of serious renter activity is the fact that the number of new rental properties becoming available is shrinking. With less stock, those serious about renting are required to narrow their focus and are more likely to be highly-engaged with what’s available online.
The data indicates that it isn’t just search volumes that are climbing, we are also seeing a significant increase in the volume of people searching that are in the late stage of their rental decision.
All states recorded an increase in the volume of high-intent rental activity last week except for Western Australia and Tasmania, which fell slightly.
Since the recent low related to COVID-19 serious renter activity has more than doubled in New South Wales (110.2%), Victoria (133.8%) and Australian Capital Territory (140.1%). The smallest gains have occurred in Tasmania (45.2%) and Northern Territory (48.5%).
What about compared to last year?
Nationally, serious renter activity is up 70.5 per cent higher on last year.
The heightened rental activity is being felt in all states and territories with the largest annual increases in Australian Capital Territory (102.0%) and New South Wales (84.3%), while South Australia (20.8%) and Western Australia (41.5%) recorded the smallest increases.
While a lot of people are showing high-intent in their rental searches it remains to be seen whether they will actually move, especially considering there is a rental moratorium in place.
The rental market remains challenged with international borders closed, first-home buyer demand being pulled forward the government’s HomeBuyer initiative and people under the age of 30 being much more likely to have lost their jobs through COVID-19.
While a lot of people are actively looking at rental accommodation it may not be until later in the year when we actually see them moving into new rental accommodation.
CAMERON KUSHER is the Director of Economic Research for the REA Group
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j.ballantyne1990-6AQqhLzZaK

High-intent renters are still very active on realestate.com.au: Cameron Kusher

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GUEST OBSERVATION
The New South Wales government has introduced a bill to reform the Residential Tenancies Act. This act sets out the rights and responsibilities of landlords and tenants in private rental accommodation in NSW.
The bill’s proposed limit on rent increases to one in every 12 months is essential, as are the proposed minimum standards for rental accommodation. However, my ongoing research with single older women renting in Sydney points to an urgent need for a cap on the value of rent increases and for an end to “no grounds” eviction. Victoria adopted these measures earlier this month.
Reform is essential. Growing numbers of Australians rent their housing and increasing proportions are expected to rent long-term. This makes it essential that private rental housing meets the need that every person has for a secure and affordable home.
It’s getting harder for older renters
It is getting harder for older renters to find adequate, appropriate and secure housing. Older women – the focus of my work – are at particular risk. This is due to longer life expectancy, lower incomes across the life course, and less access to benefits like superannuation. Women also experience a greater loss of income and housing standard than men do after relationship breakdown, and are at greater risk of domestic violence.
Their stories point to the role of flaws in the Residential Tenancies Act in compounding housing insecurity.
Rising rents add to hardship
Rising rents were a problem for nearly all women I spoke with. They depleted women’s budgets, leaving little money to buy food or pay for utilities. Many relied on local charities for food and help to pay energy bills.
One woman described how she would add protein to her meal by buying a single chicken breast, slicing it thinly and freezing each piece separately to be defrosted over the next week or so. Another relied on vegetables the local greengrocer bundled and discounted before throwing out.
In winter, when heating bills mounted, she relied on a local church with a weekly food pantry. This food, donated by local supermarkets and community members, was frequently past its “best before” date. As a low-paid community worker living in an area with a significant number of disadvantaged families, she collected food alongside her clients.
Two women coped by moving into their cars. They subsisted on tins of food that they could hide in the car. At night they kept themselves safe by parking in familiar locations.
Living with substandard conditions
Rent rises also made it difficult to find appropriate housing. Affordable housing was often substandard. Many had difficulties getting landlords to agree to repairs.
One woman described how her rented unit began leaking. The leak was severe and lasted for nearly two years. In this time she lived with increasing mould and lost access to nearly 40% of her home. She sought repairs from the landlord, but only cautiously, because she was afraid of eviction.
When the leak was eventually fixed her rent went up 20%. That left her with only A$30 a week after rent, essential bills and transport. She couldn’t afford food and relied on local charities until she found cheaper housing in a distant, transport-poor suburb.
Another described a similar leak: "When it rained the water would come straight down into the doorway. And that was the only way you could get into the house […] it was in the house and even in the bedroom."
Despite this the owner increased the rent. The real estate agent notified her of the increase by letter, but distanced herself from repair requests when confronted in person stating: “Well, we can’t do anything [to fix the property] until the owner says we can.”
The agent helped the landlord to make more money from their investment, while illegally blocking this woman’s entitlements to secure and usable property. The impact on her capacity to take care of herself was significant. Living with the leak risked her health. However, challenging the landlord – pushing them to repair the leak – risked eviction.
Rethink the value of rental housing
These stories show the need to rethink how we value and regulate private rental housing. It is time that we recognise the fundamental role that housing plays in our ability to meet basic needs – for shelter, warmth, food and above all a sense of security and home.
When housing is too expensive, unsafe or inadequate, our capacity to meet our care needs deteriorates and our health suffers. For women in my research their capacity to age in place – and even to remain housed – was challenged.
This is not good for tenants or landlords. Although popular wisdom suggests tenants and landlords have different interests, they in fact have very similar concerns: both benefit from secure tenancies and rental properties that are well maintained and cared for.
The proposed amendments to the act are a good starting point.
Restrictions on the number of rent increases in a year are essential. However, the women in my research struggle not just because of the number of rent increases they face. They find themselves in precarious situations because of the size of the increases, which in some cases left them unable to afford necessities like food.
Minimum housing standards are also essential. The women in my research cannot begin to maintain their health or age well at home if their home leaks or does not meet other basic standards.
But perhaps more pressing is the need to end no grounds evictions. For women in my research, repair requests carried the risk of eviction. This left many afraid to ask for repairs. They lived in unhealthy and unsafe housing rather than risk eviction in a market with few affordable options.
Landlords in many areas can readily replace tenants. And an evicted older woman can easily end up living in her car.
Ending no grounds evictions will have no impact on landlords who do the right thing. They will still be able to terminate a lease on reasonable grounds such as renovating or moving into the property. It would, however, help put an end to retaliatory evictions, which in turn would support efforts to maintain minimum housing standards.
<hr>
This article is based on research findings presented in a talk by the author at an event, Fair for Everybody: Reforming Renting in NSW, hosted at Parliament House on Wednesday.<img src="https://counter.theconversation.com/content/103842/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important;">
Emma Power, Senior Research Fellow, Geography and Urban Studies, Western Sydney University
This article is republished from <a href="http://theconversation.com" target="_blank">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/life-as-an-older-renter-and-what-it-tells-us-about-the-urgent-need-for-tenancy-reform-103842" target="_blank">original article</a>.
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