Insights

Last week The Age reported that rental prices became stagnant in the December quarter as unit rates fell. The article included some insights from Valerie Stamp of Hodges Brighton as to how landlords can avoid suffering from these sluggish prices.

High levels of apartment construction are affecting rental growth and vacancy rates, new Domain Group data shows. The median weekly asking rent for houses remains $380, while unit rents have dropped 1.4 per cent to $360.

With December vacancy rates tracking at 3.9 per cent for Melbourne units compared with 2.1 per cent for houses, renters looking at the former would appear to have more choice.

Domain Group senior economist Andrew Wilson said an increased supply of new apartments in Melbourne would continue to affect landlords facing prospects of lower rental growth.

“Once it starts to impact on rents, it becomes bad news for developers because investors aren’t interested in a falling rent environment, as well as the issues to do with prices,” he said.

Valerie Stamp of Hodges Brighton said rents had been “pretty levelled” for the past 12 months because of new apartment blocks; with about 40 per cent of some blocks being sold to investors for their superannuations.

“Often, when that happens, everybody wants their property rented straight away, but, generally, the market is fluctuated and it takes a while to get them all leased out,” she said.

“So if you’re in that situation, you would be better taking a lesser rent in the first instance just to secure a tenant, and when everything’s settled down and when you renew your lease, look at a rent increase then.”