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Negative Portfolio Growth – Is This the New Norm?

By Mark Sinclair, Realestimations
16 May 2022 | 1 minute read

Promoted by Realestimations.

The impending Federal election has put the brakes on parts of the property market, which is a standard phenomenon across much of the broader economy until the election is over.

This has nowhere near the impact as the first official interest rate rise from the RBA in ten years with more rate rises expected. The fear this puts into the broader community is ever present in every form of media.

Several of our clients, so far this calendar year, are reporting increased numbers of their property owners either selling their investment properties or getting appraisals. The main trigger point for the increase are owner’s fears that increased interest rates will see property values decline combined with increasing their repayments – these property owners are getting ahead of the curve and are factually correct.

As there are many property owners who have never experienced higher interest rates and stagnating property values, the trend of some investor exodus is expected to continue in the short to medium term.

What does this mean for rent rolls?

It is feasible, and in some cases, highly likely it will result in negative growth of portfolios. Negative growth is where more investment properties are no longer managed compared to the growth of new properties under management. If not addressed properly it could be significant.

This is not a new industry trend, but it is new for many real estate agencies that have been practising for five – six years or less.

As interest rates rise, we expect more agencies to be reporting negative growth. It is very important to be aware of the trend and what impact this may have on your business.

So, what can be done to address the issue and reduce the impact on your portfolio?

  1. Discuss the issue with your property management team and ensure that they advise you of any owner that they feel may be thinking of selling. There is nothing worse than one of your competitors being appointed to sell one of your managed properties.
  2. Be proactive with your communication with the ‘at risk’ owners. As the business owner, be on the front foot and contact these owners to see how or if you can be of help.
  3. Ensure that any new listings from your rent roll are offered to your current property owners first.

Follow these simple tips to reduce the effects on negative growth on your portfolio. 

Realestimations

www.realestimations.com.au

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Negative Portfolio Growth – Is This the New Norm?
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