Buyers Advocate Melbourne

The most recent figures released by the REIV suggests that presently a 3.1% vacancy rate is present in the Melbourne market place at the moment.

Looking closer into the city centre it’s currently reported that 3.9% of property 0 – 4km of the CBD is vacant while 3.6% of property sitting within 4 – 10km of the CBD is also vacant.

The figures are collected from Real Estate Companies by way of survey  and the proportion of vacant property sitting on their rent rolls.

This is a rather profound shift and it’s one of the highest vacancy rates I’ve seen for some time.  It’s important to note that this rate is for a given month.  However if we look at the data below then we see some interesting things:

June 2009

0 – 4km of CBD : 1.2%

4 – 10km of CBD : 1.5%

June 2010

0 – 4km of CBD : 0.9%

4 – 10km of CBD : 1.3%

Present:  June 2011

0 – 4km of CBD :  3.9%

4 – 10km of CBD : 3.6%

So what’s the cause?

This time of year is generally a tougher slog for the rental market, however it doesn’t help explain the present statistics.  In fact the past few months of data shows some real concerns for landlords on the horizon.

My initial thoughts are a combination of factors:

• 1.  We’ve overbuilt

We see plenty about the fact that we’re under supplied when it comes to housing.  I think in past times gone by,  this might have been the case.  However I think we are in a different situation now.  We’ve overbuilt in the past few years,  and we’ve overbuilt the wrong type of accommodation.

• 2.  Population growth is slowing

Melbourne’s population has started to slow,  yet new projects and developments have only grown.

• 3.  Prices has stagnated and fallen in many instances

As prices have softened,  this has led many owners forced to rent their property out rather than sell it.

• 4.  International student levels have dropped off

International students aren’t coming in the same numbers as previous years.  High Australian dollar plus other reasons.

• 5.  Staying at home longer + Sharing of space

A shift of youngsters staying home longer is evident plus those seeking to share accommodation.

• 6.  No one wants to live in a box

Too much of what’s been built plus what’s going through construction at present,  is not the type of accommodation people want to live in.  People live in ‘a box’ when the market is so tight that they don’t have a choice.  Bring choice into the market and this stock gets absolutely left behind.

Now we are still seeing strong demand for the good stock, and I don’t think this will change.  Yet some big shifts are happening is this section of the market and it’s looking a little better for renters rather than landlords.

An expectation of rents increasing in a flat / dropping market property market are always a strong viewpoint held by many.

While a property market suffering from confidence issues does push more prospective buyers to renting instead,  it also pushes many owners to rent out their property rather than sell.  Hence the push-pull effect of softening conditions on the rental market.

We also have a number of projects due for completion in and around the city areas.  In my experience a number have purchased with the viewpoint of a quick ‘flip’ in mind.  This will also push more onto the rental market.

So the great past rental shortage might not be as severe as we’ve experienced in Melbourne for the next few years.

Although the rental market has quietened down somewhat over recent months, the task of securing a rental property is still a daunting process for many tenants.

There are often many tenants applying for the one property which leaves a number of other properties on the horizon as better opportunities. In any case though, these  tips will assist in making the process less stressful and help you secure the rental property you want -

1. Ring the agent prior to the inspection time to show your interest and ask for an application

2. Bring the completed application form to the inspection, along with written employment and previous rental references and copies of proof of identification and income. Provide these to the agent when inspecting the property.

3. Present yourself well. Often an agent will judge the way you will look after a property the same way as you look after yourself.

4. Have one months rent and bond ready to go. Be prepared to pay these as soon as required.

5. Ask the agent at the inspection if there’s anything else you can do or provide that will be of advantage to you.

6. Be clear that you are prepared to sign a lease straight away and will take the property as soon as it comes available.