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The tricky subject of dropping rents is back on the agenda after new research showing the market turning in favour of tenants.
Rents have become more affordable in all states except Queensland and South Australia, with Western Australia and the Northern Territory making the biggest affordability gains, according to a report by the Real Estate Institute of Australia and Adelaide Bank.
Momentum Wealth property wealth consultant Clare Christiansen said rising affordability has made Perth a more price-wary and discerning tenant market.
“Tenants are being more vigilant, taking more time to sign lease agreements and are comparing a greater range of properties,” Ms Christiansen told Residential Property Manager.
Ms Christiansen said it is important for property managers to be proactive in keeping landlord clients informed on rental market changes.
“Conditions are slightly weighed in favour of tenants, therefore market prices need to be closely monitored, discussed with the client and, if necessary, reduced to meet demand,” she said.
“It’s also important to make clients aware of the potential losses they face if they don’t meet market-pricing expectations.”
Jody Hayes, managing director of Call2View Real Estate in Darwin, said her firm is dealing with the highest vacancy rates the Northern Territory has experienced in years.
“Being able to show the landlords specific data and rental properties comparable to theirs certainly helps when the time comes to sit down and speaking about adjusting the price of their property,” Ms Hayes said.
“Other key factors landlords don’t necessarily take into consideration are maintenance and upkeep of the property, as well as paying the mortgage and insurance costs while it is empty.
“Sometimes, adjusting the rent a few dollars to have the property tenanted and being looked after is a key factor in assisting with an adjustment.”
According to the report, the Northern Territory experienced the biggest gain in rental affordability, with the proportion of family income required to meet rental payments falling from 34.0 per cent in March 2014 to 31.0 per cent in March 2015.
Affordability in Western Australia improved from 25.0 to 22.9 per cent, while affordability in NSW improved from 29.0 to 28.0 per cent.
Rent also became slightly more affordable in Victoria (from 23.4 to 23.3 per cent), in Tasmania (from 27.1 to 26.9 per cent) and in the ACT (from 18.0 to 17.9 per cent).
However, affordability declined in Queensland (from 24.0 to 24.2 per cent) and South Australia (from 23.2 to 23.3 per cent).
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