A Sydney real estate director has said property managers could bear the brunt of a softening rental market in the next few months.
Belle Property Annandale and Balmain director, Jeremy Payne, told Residential Property Manager the sizeable increase of rental stock coming online due to a strong sales market over the past 18 months has translated into a decline in rental prices in Sydney.
“A lot of investors have jumped into the marketplace and obviously those properties have turned into properties that have come online from a rental perspective – so we are seeing high levels of stock,” he said.
“That has actually translated to a softening in rental prices that we have discovered in the last four weeks or so,” he added.
Mr Payne said he has seen approximately a five per cent reduction in rental prices.
“It is [also] taking twice as long to lease things, so properties that were leasing within one to two open houses, are now taking three or four open houses,” he said.
Mr Payne said the decline in rental prices will “obviously” bring with it an increased workload for property managers from a time-on-market perspective.
“[Also] where we had multiple applications, we had the one application that we tended to just jump on. So maybe because we can’t pick and choose tenants the quality of applicant might go down,” he said
“We won’t know that really until the longer term, but it could be a possible knock-on effect,” he added.
Mr Payne said to balance out the softening in rental prices, property managers need to be educating their owners about the need of a potential “short-time” price adjustment.
“In six months' time that price can be reviewed if it is a six-month lease, and then it should hopefully be able to go up in price,” he said.
“As long as you educate your owners correctly and give them the correct advice then they can make a decision whether they take a short-term cut or hang and wait out and potentially have a property unoccupied until a tenant comes along who is prepared to pay the asking price.
“I think it is in their best interests to make the price adjustment now to get the property leased,” he added.