What next for Tasmania’s rental market?

Despite a 0.93 per cent vacancy rate in Launceston, Ms Bartels, a finalist for regional property manager of the year at the 2023 REB Awards on 4 May, has revealed to REB that her office has seen an “approximately 5 per cent reduction in achievable rents in comparison to three to six months ago. 

A changing renter demographic in the region over the past few months, including a shift from “high-income professional singles and couples who would predominantly rent more central, premium properties” towards young singles and couples, and the significantly affordable shift this has birthed, has “brought down what people are prepared to pay.”

And so, despite a sub-1 per cent vacancy rate, which in other parts of the country such as Nerang has facilitated in advertised stock lasting barely a week on the market, Ms Bartels explained certain properties, particularly those with advertised rents exceeding $500 per week, lasted over a month without finding a suitable applicant.

In adapting to this, Ms Bartels and her team at Knight Frank Launceston have “had to change the language with owners and begin educating them that there are going to be periods where rent will no longer pay a net return.”

However, the increased time on market does not represent dwindling demand for rentals, and she explained her team has implemented “effective and streamline procedures” to facilitate a “fast and efficient” leasing process for the team while allowing them to manage rising demand.

These systems include centralising their application software to streamline applicants through one program, “which we found the easiest for the user and property manager,” as well as the implementation of automated email or text responses to enquiries, and the utilisation of programs such as DocuSign and InspectionManager, amongst others.

It has been through the adoption of such systems that Knight Frank Launceston has been able to match tenant demand effectively and reduce property management stress.

Looking forward, Ms Bartels believes several challenges will present themselves to property managers in both northern Tasmania and across the country, including a changing market for landlords whereby, in Launceston and surrounding regions, properties asking for rent over $480 per week have experienced slowing demand.

“Property owners have become accustomed to achieving strong prices when letting or renewing leases over the past 12 to 18 months and are therefore reluctantly adapting to the new market conditions,” she said, adding that this trend is placing pressure on property managers to achieve similar results to those achieved historically.

Further playing a role in shaping the final eight months of the year are increasing cost-of-living pressures, whether that be through inflation or interest rate rises, experienced by those on both ends of the table — property managers and tenants.

“Property owners have less money to spend and are more reluctant to commit to repairs and maintenance on their investments, [while] tenants experiencing the same financial hardships have less tolerance in general due to added stress,” she explained.

Such financial problems, combined with record high rents and falling yields, could pass the stresses of tenants and landlords onto property managers acting as mediators.

As a result of increasing property manager stress, Ms Bartels quality staff retention will be one of the greatest challenges facing the industry.

“I think a savvy rental department will do well to highly support their rental staff, promote good cultures, and pay well to offset the tougher coming conditions,” she said, before disclosing the uplifting value of possessing a great property management team.

“Having a team of motivated and passionate property managers, we have found that we are all lifting each other up, opening discussion, and working on solutions and problems, not only in the role but within the industry more broadly, and making team decisions regarding the growth and changes to the department.”

Despite its challenges, Ms Bartel strongly believes the year ahead presents several opportunities for the sector.

“I think that with the struggles imposed by inflation, we will see owners changing agencies and, in turn, providing opportunities for well-positioned and well-structured departments to gain new business,” she said.

Given the ever-increasing pressure a tight, shifting rental market places them under, Ms Bartels believes “property managers are more than ever before, under high demand,” adding poorly structured, inexperienced agencies that offer poor support to their property managers will “likely lose staff to competitive agencies or through burnout [or them] leaving the industry.”

“Property managers will likely have opportunities to move to comparative agencies with better salaries, terms, conditions, environments and cultures, and systems and software,” she concluded.