The number of renters to increase in Australia?

The number of renters to increase in Australia?

A new report by researchers from Swinburne University of Technology, Australian home ownership: past reflections, future directions, delves into the levels of homeownership in Australia since World War II and what we can expect in the future. The great Australian dream of owning your own property is still a big ticket item on most Australians bucket list, but for some, in the decades to come, it could remain a dream as up to 40 percent of Australians could rent in the future, according to the report.

Several factors are expected to drive the anticipated increase of people who rent in Australia in the coming years, this includes ongoing affordability challenges. Interestingly, the report discovered relatively stable homeownership levels in Australia. For example, in 1976, approximately 68 percent of people were owner-occupiers, and in 2016, around 67 percent of Australians were owner-occupiers.

According to the report, approximately 50 percent of Australian households under 60 years old will rent from private landlords over the next 20 years. Another interesting finding is that simultaneously, owner-occupiers are expected to decrease to 63 percent. Of those renters, it’s expected that 51 percent of them will be in the 25 to 55-year-old age bracket.

So, what does that mean for property investing?

Whilst interesting, these are only forecasts. Yet the report does provides some insight into the future. Regardless, the changing proportion of owner-occupiers and renters will likely happen steadily as it has over the last four decades.

To continue to be an avid property investor over the coming years, it is important to keep these changing demographics in mind whilst balancing this with your priorities. The fundamentals in the property market are unlikely to change. People will still look for three key features for their home; living close to amenities, decent infrastructure and close to employment opportunities. Aim to find properties that tick these boxes, whilst structuring your investments in a way that helps you meet your long-term goals. This will keep you on track to building a strong portfolio for yourself.

The important thing for investors right now, and all the time, is to regularly check-in and ensure your portfolio is working towards meeting your long-term goals. And if it’s not, that’s ok. It’s a timely note to shift things around to make sure you’re building sustainable, long-term wealth.

Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.

What To Expect – The Property Market in 2020

What To Expect – The Property Market in 2020

Many industries have been greatly impacted due to the COVID-19 pandemic, this includes real estate. It is understandably a stressful time for people, with inspections changed to adhere to the government’s isolation and social distancing measures, and a fair few landlords and tenants facing financial hardship. How the property market performs as we move to the other side of COVID-19 is I’m sure at top of mind for a lot of property owners and investors,.

Depending on what you read, some economists believe we could see an 11 percent decline in property values across Australia. However, some have more of a bullish scenario and there are predictions of almost a 32 percent decline in house prices. There is a lot of hype around this topic currently and rather than get too drawn into the potential for a fall in house prices, it is more important to understand what’s going to drive property prices in Australia over the next couple years. We have included an overview of key factors that may impact the rental market over the coming months and years.

Increased Pressure on Rent Prices

All of the short-stay/short term leasing platforms such as Airbnb and corporate accommodation are experiencing a significant decrease in demand. Majority of these properties from these platforms have been forced to list as long term rentals. This is placing downward pressure on rent prices due to more stock becomes available in the market and giving tenant much more choice. Areas most affected are those with large international student populations which in turn have increased vacancy rates and has also placed pressure on rental prices.

Market Conditions across capital cities

Since isolation measures escalated across Australia in March, the rental vacancy rate across Australia increased by 0.8 per cent to 2.5 per cent in April. Sydney and Melbourne fared the worst with rental listing increases of 36.2 per cent and 34.1 per cent, respectively. Areas with large populations of retail or hospitality workers, international students and other people from overseas have been hardest hit in these cities.

Immigration into Australia

Australia’s property market has been buoyed in recent years by immigration. Immigration numbers could see a decrease by around 300,000 people over the coming years due to COVID-19. This could cause a flow-on effect where property prices and the rental market may be hardest hit for cities and regions that have typically had a large migrant population.

Ultimately, no one knows where property prices will go, and what kind of policy response the government may have if we end up in a more bearish scenario. The key way to prepare for any scenario is ensuring your mortgage is suitable for your situation and can weather an economic downturn. Regardless of COVID-19 or other macro events, having this approach to your mortgage at all times will ensure you don’t need to buy into media hype around any scenario.

Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.

Leasing Your Apartment In A New Complex Or High Development Area

Leasing Your Apartment In A New Complex Or High Development Area

Buying a new apartment is exciting, especially if it is brand new. There are no maintenance worries, you have a 90 days defect warranty and if you are an investor you can take full advantage of a tax depreciation schedule. However as in a new complex, you are probably not the only investor, in fact, more than likely 50% of the complex is also an investor.

So how do you lease your property with minimal vacancy?

There are a few strategies that you can implement to ensure you get someone in quickly and minimise your vacancy.

First, we have to understand the market and the situation. With a new complex, there is usually more stock than there is demand, so as an owner/investor you need to understand a few market factors.
1. The rental appraisal that you initially received when you bought off the plan is most likely unrealistic at this time due to the amount of stock.
2. There will be multiple agencies with open homes on regular Saturdays and Wednesdays.
3. Most of the properties will look very similar and will not have a unique point of difference outside of maybe the floorplan and the level.

While this can be a bit concerning, there are a few ways to battle this and get the best outcome you can during this time.

Be Conservative with pricing
By making your property the most attractive property in the complex will drive competition to the property. You can do this by advertising with a range to capture more people and in turn, this will give you some negotiating opportunity with the tenants rather than giving them all the power.

Private Inspections
To battle the multiple listings and the twenty different real estate agents that are standing outside the complex on a Saturday. It is important to see if your agent is willing to do weekday inspections and private inspections. This will give you an advantage as prospective tenants will not just shop around and see multiple properties on a Saturday, instead, they will only have time to see yours and maybe one more during the week, leaving a lasting impression on the tenants.

Irregular Lease Term
This more so helps you the next time you are looking for a tenant. By Securing a lease that isn’t a multiple of 6 months can mean you break the cycle. While most other owners are securing a tenant for the regular six or twelve months, negotiate a 10 or 15 month lease with your tenant so you don’t have the same situation again in 6 months time where again there is too much stock on the market.

If you can implement these strategies then it will assist you with minimizing your vacancy and maximise your outcome in the current market but most importantly it will future proof you as well.