In our experience – at all four of our Harcourts Maynard Burgoyne offices over the Peninsula, we are finding that this year the market has been a lot slower than last year.
From January – March we found it really difficult to re-tenant properties and often had owners with a vacant property for up to 3 months.
This seems to have changed over the last few weeks and all the properties have now been re-tenanted, but in some instances the owners had to lower their rental expectations.
This makes our experience quite different from the data in the most recent PayProp Rental Index – are are definitely not finding the double digit growth in year on year rentals – in fact, the rental growth we are experiencing is closer to the national figures around the 7% mark.
The problem generally hasn’t been in interest in the properties (except for the higher end of the market), but it seems like affordability has become an issue. Our basic affordability criteria is that the prospective tenant/s need to nett 3 times the monthly rent as a minimum for a property and we found it more difficult to find tenants that fulfilled these criteria.
Our next issue was when we did a credit check – we use the PayProp credit check and in that check we get detail of a tenant’s monthly fixed commitments – as a final affordability check we need to take these into account and then still have them having a spendable income of 2 x the rent. More and more we are finding people have too many commitments – as well as credit issues.
This is our experience throughout the Peninsula, so we are turning more applications down than before – even at the end of last year. We estimate that about 9 months ago approximately 85% of our applications were passing muster, but now the figure can be a low as 40%. This makes using an agent (who has access to this information) more and more valuable.
As an example, a property we recently tenanted in South Shore Beach Apartments took about 3 months to tenant and we had 6 applications, of which 5 we could not recommend to the landlord.
By Shaun Luyt
Harcourts Maynard Burgoyne Rentals Operations Manager