The third quarter of 2018 was a testing one for Eastern Suburbs property investors, with vacancies rising and rents often falling. But there are some things landlords can take to make sure they stay one step ahead.
The third quarter of 2018 was generally not a great one for property investors. The same negative sentiment affecting property prices also now seems to have spilled into the rental market. Tenants are staying put where they can and this means the number of people we’re seeing at open homes is as low as it has been for some time. This gives prospective tenants real bargaining power and, in some cases, landlords have needed to reduce rent to meet the market.
Despite this, certain types of property and market segments are performing better than others. There are also there are some steps landlords can take to give themselves the best chance of securing a quality tenant.
The Eastern Suburbs Real Estate Sales Market: Prices Stable
According to CoreLogic, the overall Sydney auction clearance rate is 53.5%, down eight per cent on this time last year. In the Eastern Suburbs, the auction clearance rate is higher at 55.5%.
Eastern Suburbs Sales: Breaking It Down By Numbers
- Eastern suburbs auction clearance rate: 70% (Wentworth Courier: 29/09), 41% (Southern Courier: 29/09)
- Median Sydney property price as at 30 September 2018: -1.5% qtr ($847,948)
- Median Sydney unit price: -0.21% qtr ($734,900)
- Median Sydney house price: -1.7% qtr ($976,365)
Eastern Suburbs Rentals: Expect The Market To Improve In Spring
There’s no beating around the bush: rental demand in Sydney’s Eastern Suburbs was quiet over winter. There were often few prospective tenants attending open homes, with numbers ranging from around 12 down to zero.
Anecdotally, we found the market in houses to be generally more buoyant than in units - perhaps because tenants see this as a good time to 'upsize' their property. The two bedroom/two bathroom apartments remain popular, especially in Randwick. In fact, given the ongoing demand that stems from its proximity to the university and hospital, Randwick seemed to outperform most parts of the Eastern Suburbs rental market over winter.
Our view is that the Eastern Suburbs rental market has bottomed and that Spring will see renters coming out in greater numbers. This could be amplified by financial institutions tightening their lending criteria in the wake of the Banking Royal Commission - and thereby forcing potential first homeowners to continue renting.
With this in mind, there are a number of things we’ve noticed tenants are looking for, as well as some steps investors can take to secure decent tenants:
- New and renovated homes are outperforming the market. Those in original condition are often harder to rent, giving tenants more power to negotiate hard. If you haven’t updated your property in a while, now may be a good time to do so.
- In a renter’s market, more tenants are making parking a non-negotiable so properties with a parking space are much more rentable than those without.
- Investors need to be realistic about the rent they’re asking: meeting the market and securing a tenant is almost always preferable to a vacant property.
- Presentation and marketing are vital. Without investing properly in these, it is difficult to even attract prospective tenants to an open home.
- Long-term renters are like gold. If you’re nearing the end of a lease, make sure you communicate your intention to extend or renew with your tenant ahead of time.
Eastern Suburbs Rentals: Breaking It Down By Numbers
- Average days vacant (Taylors): 18-22 days (Industry 40-50 days)
- Median Sydney rental price (units): $513.70 (week ending 04 October 2018)
- Median Sydney rental price (houses): $710.50 (week ending 04 October 2018)
- Vacancy Rate (real estate industry): 3.0%
- Vacancy Rate (Taylors): 1.2%