Property managers will have to get creative when listing property in one capital city, with a huge number of developer units set to flood the market in 2014.
While currently recording the highest vacancy rate of any capital city, at 3.4 per cent, the outlook for Melbourne is less than positive, with a number of key developments set to inundate the market in 2014.
According to SQM Research, Melbourne CBD recorded a 5.8 per cent vacancy rate – well above the three per cent target for equilibrium.
Speaking with Residential Property Manager, CEO of Harcourts Victoria Sadhana Smiles said as an investor herself, the market is set to become a challenge for property managers and landlords alike.
“What these developments will do is push vacancy rates higher and potentially push rents down. But when you look at the Melbourne market in terms of apartment living, you’ve got to question if developers are getting it right,” she said.
According to Ms Smiles, data shows that young adults are living with parents longer, causing a reduction in the number of first home buyers and empty nesters looking to downgrade.
“So now we have a whole inner city designed for singles and empty nesters who don’t exist. They want family homes, but there are none available,” she said.
Worse still, the new development stock will all be more of the same.
“So we have a huge pile of properties hitting the market at the same time this year - who’s going to rent them out? It’s going to be tough," she said.
“As an investor myself, I know I had a lot of competition when trying to rent out my investment in Richmond. I had to bring my price down and bring white goods and blinds in to even secure a tenant.
“It’s going to get harder and people are going to have to get creative in how they rent out properties, by offering add-ons instead of competing on price.”