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A leading property business analyst has predicted that the demand for rent rolls will increase as vacancy rates decrease.
Loretta Truscott is the director of real estate business broker BuxtoniQ and acknowledges that the rental crisis currently gripping Australia — which has caused average national vacancy rates to drop below 1 per cent — is good for business, even if it comes at a cost.
“The rental crisis isn’t great for property managers, but the businesses themselves have a track record of providing highly stable income, a bonus in this environment,” she said.
She shared that her business is expecting to see an uptick in real estate business sales this year as competition grows for well-managed rental portfolios.
“Rent rolls are hot property and we are experiencing very strong demand from buyers,” she revealed, adding that “established real estate players are looking to bolster their business as residential sales volumes come off”.
As well as decreasing rental availability, Ms Truscott has listed a number of other factors driving the low vacancy rate, including “a rise in single households, demand in sought after suburbs and new housing supply failing to keep up with a rising population over the last decade”.
She outlined how increasing migration is set to further pressure the rental market. “With the population coming back and an undersupply of new housing, there is only one way for rents to go and that is up.
“We’re also concerned about the impact of new tenancy regulations deterring landlords and the potential for developer insolvencies to increase, affecting new housing supply,” she said.
Her concerns levelled at legislative changes in Queensland, where new laws, set to come into effect from 1 October 2022, will allow the removal of the right for a property owner to end periodic tenancies by simply providing notice.
The Real Estate Institute of Queensland (REIQ) has previously warned that this could lead to an investor exodus.
Similarly, the West Australian government has proposed alterations to its own residential tenancy laws, which the state’s real estate institute believes would “plunge the region deeper into a rental crisis”.
According to Real Estate Institute of Western Australia (REIWA) president Hayden Groves, the new laws “would make renting more difficult and expensive for tenants, while simultaneously stripping investors of their rights and pushing up property management fees”.
Ms Truscott concluded that these parameters mixing is leading the housing market towards a perfect storm for renters and that without “serious action to deal with the lack of rental properties, the market is likely to remain tight for some time to come”.
