It’s definitely too early to call the direction for capital gains but the new year rental market has already got off to a flying start.
Demand for rental properties, especially in our traditional target areas in Melbourne, Sydney and Brisbane, is very high. We currently have no vacancies in most of our portfolios, especially for suburbs such as Carlton and Fitzroy (Melbourne) Newtown, Enmore and Surry Hills (Sydney) and Toowong and St Lucia (Brisbane).
However, this demand is yet to translate in to any significant increase in rental income, as the ongoing supply of off-the-plan apartments continues to flow through the market.
Despite the drawbacks of many of these high-rise apartments, tenants are still attracted to the idea of “new”. Brand new apartments, carpets, appliances, etc. It is only after people have experienced the lifestyle issues within these towers of extreme high density living that they graduate back to more traditional housing and smaller apartment and townhouse developments.
The new owners of these apartments, too, have yet to realise the full impact of their decisions but in the meantime they are rapidly discounting asking rents to secure a much needed income to meet mortgage repayments.
So, although we have very high rental demand for our properties, we can not expect a matching rent increase just yet. But I suspect it won’t be too far away. We are about to enter the “head office shuffle” period, where corporations often reassign interstate and international management and staff to different locations. And, of course, we are preparing for the return of the international student population as the Australian academic year prepare to get underway.