Landlord Resources

Spring Rental Market Outlook

By Sarah Barton, Terri Scheer Distribution Channel Manager

As spring approaches, Australia’s real estate industry is preparing for the heightened activity it is accustomed to each year.

The months of September through to November have always been a busy time for property sales with extra stock traditionally hitting the market.

However, the economic impact of Covid-19 and interest rate uncertainty will potentially alter buying and selling conditions in some markets while others have stabilised or rebounded.

Terri Scheer spoke with two leading Australian property managers to find out where the rental market is headed later this year.

In inner Sydney suburbs, the rental market has rebounded from Covid-affected drops in rental income value with rent prices returning to levels similar to those achieved before the Covid-19 pandemic.

According to Carlo Zaccariotto, Licensee in Charge at MGM Martin in Sydney’s Zetland area, asking prices for rents fell in 2020 as international students and workers returned to their homes overseas.

“The demand and value in Sydney’s rental market dropped significantly during the first two years of the Covid-19 pandemic,” Mr Zaccariotto said.

“However, it has now returned with a red-hot market and low vacancy rates delivering rental returns on par with those experienced pre-pandemic.

“The vacancy rate is the lowest it’s been in years with landlords and property managers successfully finding new tenants to fill vacant properties quite quickly and that should put investors’ minds at ease.”

As for purchases, Mr Zaccariotto said that despite Sydney’s market cooling from its peak earlier this year, properties for sale are still moving rapidly.

“Talking about our office in particular, stock is still moving as it has right through the pandemic however it’s not as frequent and the selling market has started to return to previous levels,” he said.

“At the moment, we’re noticing less investors looking to buy with more owner occupiers snapping up available apartments and houses in the area.

“With uncertainty in market conditions, some investors are choosing to sit tight to see where the market lands later this year.

“At the same time, high demand for rentals and prices going back up in the inner Sydney suburbs will potentially see investor numbers increase in the back half of 2022,” he said.

On the other side of Australia, Perth’s investor market is running red hot with availability of stock the biggest challenge for potential buyers.

Michelle Rigg, General Manager at Rentwest Solutions, said with less rental properties available as owners return to their homes they were renting out or owner occupiers secure properties, competition is heating up.

“From an investors’ perspective, Perth is one of the strongest markets in Australia returning rental yields between four and five per cent,” Ms Rigg said.

“More investors are looking west and they’re able to secure great deals in a market that will continue to grow.

“All forecasts are showing that interstate and international migration to come means more growth is still expected in most areas with rents to increase for the next couple of years,” she said.

Vacancy rates in metropolitan Perth are also reaching record lows at nearly one per cent, down from three per cent in a traditional market.

“Just before the Covid-19 pandemic started, Perth emerged from our worst rental market in 20 years,” she said.

“The market started to turn in January 2020 and we have experienced heightened activity since then.

“With low unemployment and few Covid-19 restrictions, Perth’s market has performed consistently for the past two-and-a-half years.

“We were dealing with less loss of rent claims and the number of claims we’re submitting on behalf of landlords has reduced dramatically.

“However, things can still go wrong and even the best tenant can accidentally damage a property or fall behind in their rent,” she said.

Landlord insurance helps to protect against risk

Comprehensive landlord insurance provides a safety net for landlords if their tenant does the wrong thing and damages their property or stops paying the rent.

Landlords should choose a policy that provides cover against damage and loss of rental income.

An insurance policy that covers these specific risks can assist landlords to safeguard their investment and ensure they continue to receive a steady flow of rental income.

Property managers should check their authority to distribute or refer before dealing in insurance.

A distributor is able to deal in insurance on behalf of their property owner. This enables the distributor to speak with the insurer, place cover, amend cover and cancel a policy. Property management businesses can become distributors with Terri Scheer.

For property managers who are not distributors they can still inform their property owner of the existence of landlord insurance in the form of a brochure. The property owner must complete and sign the application form and send it directly to us by email. Alternatively, they can apply online through the Terri Scheer website.

Thank you to Michelle Rigg from Rentwest Solutions and Carlo Zaccariotto from MGM Martin for their assistance in writing this column.

Disclaimer:

Insurance issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as Terri Scheer. Read the Product Disclosure Statement before buying this insurance and consider whether it is right for you. Contact Terri Scheer on 1800 804 016 or visit our website at www.terrischeer.com.au for a copy. The Target Market Determination is also available.

The information is intended to be of a general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon it – please make your own enquiries. This article has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.