Property managers facing management fee suppression and low margins need to offer higher-value services to retain clients who are willing to pay the fees, according to one PM.
In a recent Property Management Excellence (PMX) podcast, LJ Hooker head of property management Australia and New Zealand Cathie Crampton urged property managers to have meaningful conversations and provide useful information that benefit their customers.
“I think largely a lot of our property management education hasn’t centred around what the client actually finds meaningful,” Crampton mused.
“We need to get much better at having a financial styled conversation. I don’t mean being an adviser. I just mean let’s understand the dynamics.”
This is particularly critical in an environment where property managers are experiencing management fee suppression due to a combination of market conditions, she contended.
There has been a substantial shift in property market dynamics, which has partly been driven by COVID, increased immigration levels, and a higher population. These factors have placed additional pressure on property supply, an issue that has lingered for over a decade, Crampton explained.
In addition, she continued, weekly rent has increased at the same time as significant spikes in property prices, resulting in yield suppression.
“The challenge that I think rests in our industry is I don’t think everybody understands that,” Crampton said.
“It’s so important that we lean into that understanding because the client expectation has shifted, rightly so. The investors are therefore under pressure. If you’ve got yields being suppressed, that means their return is suppressed.”
According to the Cotality Monthly Chart Pack for March 2026, the national gross rental yield plummeted to 3.6 per cent in February 2026, the lowest level since September 2022. Gross rental yields have been gradually easing since 2023, as growth in home values outpaces growth in rents.
The May 2026 Chart Pack showed similar results, with the national gross rental yield rising from a cyclical low of 3.55 per cent in December 2025/January 2026 to 3.59 per cent in April 2026. The report stated that there has been upward pressure on gross rental yields as rental growth reaccelerated and the pace of growth in home values eased.
While Darwin had the highest gross rental yield among the capital cities of 6.0 per cent in April, regional Northern Territory had the highest in the regions of 7.8 per cent. On the other hand, Sydney had the lowest gross rental yield of 3.1 per cent while regional NSW had the lowest in the regional areas of 4.0 per cent.
On top of this, interest rates have risen 16 times in the last four years and reduced only three times, placing more pressure on investors. There are expectations of additional rate rises.
“We’re going to see more yield suppression. In other words, the seasoned investor is looking at this and going ‘why am I investing in rental property’,” Crampton said.
“It’s too expensive. They’re looking for a different type of value proposition from the practitioners, the PMs in the industry.”
What should this value proposition look like?
Property managers need to reassess the types of conversations they are having with their owners and ask themselves whether they are delivering higher-value services, Crampton suggested.
She cited her own example of wanting to improve her investment property and add an air conditioner. Her property manager proactively provided three recommendations on the types of air conditioners she could install and reasons for those recommendations. He also provided diagrams of where it would be installed.
“I didn’t have to go back and ask for it,” Crampton said.
“I saw value in that. I pay him above the average market rate because he’s worth it.”
Crampton underscored the importance of education for both property managers and clients. She noted that property management has become increasingly professional, with many states now requiring property managers to be licensed to deliver their services.
The next step is for property managers to understand how to calculate gross rental yield and subtract tax and other expenses, and recognise that net returns could be lower than anticipated.
“[This] is why people are starting to question if they should even invest in rental property,” Crampton said.
“That begs the question, if I’m an agency owner, how do I grow my market share? So, suddenly, I’ve got to get very good at delivering and retaining my management, which is all about value proposition.
“Then I’ve got to get very good at how I get management from other environments. It can’t be about fee suppression because as you understand, property management is a high-volume, low margin game.”
The PM is the custodian
Property managers should view themselves as “custodians” of the property, Crampton said, and as such, have more financially literate conversations with clients. They could also offer services like making recommendations around home improvements and appreciation, and provide rental appraisals and an assessment of how those home improvements could impact the rent or property value.
Finally, she urged investors to proactively act on those recommendations rather than ignoring them.
She concluded: “Invite that conversation and/or respond to that conversation because it is a partnership. I do think the PM is the custodian. If you’re a PM and you’re doing these things, I think you maintain your value and then the investor will keep you as part of the equation.”
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