Winter is Coming
The following news will likely come as a shock to more than many if you have been staying attuned to the varying forecasts, predictions and general hysteria surrounding the Tasmanian rental market.
Yes, we still have a high median rent for a city of only 225k people, and those who currently have tenants will be enjoying quite generous returns depending upon what stage of the housing boom they purchased their investment property.
Annual rent increases have been enjoyed by many landlords over the past six years, this however this is not sustainable and already many homes are coming back to the market at lower prices than previous years…yes winter is indeed coming.
Currently (Easter 2023) we have twice as many properties available to rent than at the beginning of December (approximately 540 up from 260). Those that are currently on the market may well be aware of this. The key statistic is always “Days on Market” (DOM). This is reaching alarming proportions particularly in higher price categories where many of these properties have been on the market for not just weeks but months.
So, what’s happened where are all the tenants all of a sudden?
Well, they left and are continuing to do so.
Who left?
- International students an absolute key driver of rental growth.
- Immigration many have returned home since Covid and the expected influx of new immigrants won’t have an impact for some time yet.
- Corporate activity (especially city based) …not many cranes to be seen or new projects commencing hence plenty of furnished properties available.
- OUR KIDS!!
Yes, it’s right in front of us!!
Who doesn’t have or know of someone that has a son/daughter attending an interstate university or that age old rite of passage…the two-year UK/ Europe Working Visa? These 20–30-year-olds are all leaving but cyclically there is no one returning as Covid delayed and has now completely interrupted this cycle of returning students and young professionals etc.
This is not the season to be raising rents on current tenants! You will more than likely lose them only to discover that the market will only pay 5-10% less than the current price…this is already happening. In fact, many tenants are already aware of this and not renewing their leases to rent lower priced homes at the same or better quality.
This is a call to action!!
Owners/ Landlords who react the quickest in a retreating market will be rewarded and have secure quality tenants whilst those that believe naively that property never goes backwards are in for a world of financial pain and should look at the data for the mid to late 90s where our market lost around 20% in capital values.
THE BIG MISTAKE!!
Comparing your property to other unleased properties that have also been ignored by the market.
