ARE WE IN A FICKLE MARKET?
Karen Stehr Property - Leading Sunshine Coast Property Management experts
The meaning of fickle - changing frequently, especially as regards to one's loyalties or affections which is exactly what the rental market of today is doing ... changing as regards to the weather, sunshine or rain and of course the cold.
Over the last 30 years as a Property Manager I have learnt to listen to the market. That is essentially how to gain success from each market. It comes through a complex understanding of supply and demand, changing trends and other market conditions that impact the actions of buyers, sellers, landlords and tenants.
Our beautiful Sunshine Coast is a unique pocket that runs its own rental market rules exactly as it chooses with minimal relevance to what the rest of the country is doing. Despite the recent vacancy rate statistics for the June 2018 quarter which state the Sunshine Coast's historically tight market has eased yet remaining between a vacancy rate of 0.8% and 3.6% - yet, I actually consider property in the current market slow to rent.
Traditionally the cooler months slow down the pace of both enquiry and existing tenants seeking to move. I aim to ensure wherever practicable, property I manage does not have an expiry date falling due in the winter season as experience has shown me it can be very difficult to rent. The very same property in the height of summer will have potential tenants lining up at the door with their applications filled out before even stepping inside! Popular property I have rented in previous years, I find myself struggling with today at a lower rate simply based on demand in the current market conditions.
Today I only have 2 properties for rent, and only one of those is available now which portrays a very low vacancy rate. This can be interpreted as a tight market, a busy, popular investment area as there is very little available to rent. In actuality, it is not so much that it is a popular location, but astute Property Managers understanding this time of year and ensuring there is nothing to rent because it’s simply too hard to attract tenants. I prefer to think outside the square and provide lease agreements to tenants for 15 months or 8 months or whatever time frame is appropriate to avoid expiring during the difficult time of year.
I still remain one of very few Property Managers who open property over a weekend for potential tenants to view. I have always believed the weekends are when most people have the time to view property. In the quiet market of today, I notice a major change with the majority of Property Managers now holding 3 and 4 open homes on a Saturday in an effort to secure a tenant. Advertising such open homes on Instagram and Facebook and any other social media that offers a platform for an audience.
The one property I have available in Mooloolaba has 5 bedrooms, 2 bathrooms, is 2 storeys and has an extra rumpus / storage room, double garage, 2 living areas, walk to schools, beach, shops, should easily rent for $650.00 per week. I put it on the rental market at $660.00 just to monitor what activity the property would attract. Unfortunately, 3 weeks later I have had to reduce it from $660.00 to $640.00 and now it is $620.00. I held an open home on Saturday and not a single person attended.
On viewing www.realestate.com.au I have noticed property in all areas and all types, remaining on line for quite a few weeks at a rate that would normally rent very quickly. Success is only being achieved when the rent is reduced lower than expected to attract a tenant.
One tenant I recently secured had broken their previous lease in order to secure a bigger property for a growing family and business. The tenant was renting at $560.00 per week in Birtinya and had been doing so for 9 months. Their lease was for 12 months. Their agent, a well-known local franchise office advised the tenant the property was over-priced in today's market and if they wanted to obtain a new tenant to take over their lease they would have to reduce the rent to $520.00 per week. They were also advised they would have to pay the owner the difference themselves between $520.00 and $560.00 until the end of the lease! The tenant was quite surprised and so they tried for four weeks at the rent of $560.00 and no enquiry at all. They then dropped the rent to $520.00 and secured a tenant almost immediately.
The following reports information made available by research done by the REIQ regarding the Queensland rental market to June 2018.
Greater Brisbane’s vacancy rates tightened to 2.2 per cent, sitting within the tight range for the first time in nearly three years.
Redcliffe in Moreton Bay was the tightest market in Greater Brisbane, reporting vacancies of 1.2 per cent.
Brisbane LGA vacancies tightened from 3.1 per cent in March to 2.3 per cent in June. Inner Brisbane remained operating within the healthy range. However, Brisbane middle-ring vacancies reduced to 2.1 per cent, moving into the tight range.
The rental market in the tourism centres continued operating generally in the tight range, with vacancies in the range of 0.8 per cent and 3.6 per cent.
The tightest major centre rental market is Maryborough, with 0.7 per cent vacancy rate (a tightening of 1.8 per cent) from 2.5 per cent in the March quarter.
Cairns continues to be a solid rental market, with vacancies tightening from 2.1 per cent in March to 1.5 per cent in June.
Out of the major regional centres, Toowoomba has the tightest vacancy rate, at 1.8 per cent.
Mackay vacancies tightened to 1.9 per cent, which was last achieved about six years ago.
Bundaberg vacancies tightened from 3.4 per cent in March to 2.2 per cent in June, supporting the recovery of the regional rental market.
Townsville and Gladstone rental market remained weak. However, local property managers highlighted that the regional economies are showing signs of recovery, and rental demand seems to be increasing.
Cassowary Coast is the weakest rental market in Queensland. This market is historically weak but 5.9 per cent is an improvement on recent levels which included 11.5 per cent in December 2017.
The tightest of all markets in Queensland is South Burnett, where vacancies were recorded at 0.5 per cent.
The second weakest major centre market is Townsville at 4 per cent vacancy rate. The Townsville rental market has shown signs of improvement over the past 12 – 24 months. In March 2017 the Townsville vacancy rate was 6.2 per cent so this market is clearly moving in the right direction and is headed toward recovery.
The market that tightened the most from March to June quarters was Maryborough in Fraser Coast.
The market that has tightened the most over the 12 months from June 2017 to June 2018 was Livingstone followed by Rockhampton.
I guess my point is, that the key to success is to understand the market with its ebbs and flows and learn to adapt accordingly ... a slight loss today to meet the market can easily be recovered during a more buoyant one!
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