Rental properties dry up in the local area

Peter Hill

WHILE demand for regional property has increased during the COVID-19 crisis as capital city residents look to rural and regional locations for a better work-life balance, regional rental vacancy rates are also plummeting.

Real estate commentators expect regional property prices will do better than many parts of the capital cities as the pandemic drags on and remotely working from home becomes the norm.

Regional rental vacancy rates have dropped to just under two per cent across regional Victoria and New South Wales, while rental properties in Melbourne and Sydney will likely be under-utilised, with many apartment buildings coming to completion and a sharp drop in immigration and tourism.

Already Melbourne’s CBD rental vacancy rate has risen to 6.7 per cent from 3.2 per cent.

But how is the rental market holding up locally?

According to Michelle Smith at Elders Yarram there is a need for more rental stock.

“We have none – there is no rental vacancy rate at all,” Ms Smith said.

“There was none in July, and that has carried forward into August,” she said.

“We are finding in the past six months properties are selling and the buyers are moving into them.

“We just don’t have the stock for those who want to rent.”

She said there was a need for quality rental stock to be created.

Graham Chalmer Real Estate’s Rod Tatterson said the situation had existed for quite some time in Sale.

“I spoke about it some six months ago,” Mr Tatterson said.

“We have a desperate need for accommodation – places are being let even before tenants have moved out.

“The rental market here is strong, there is a good return on investment with so many looking for accommodation – the prices are forced up,” he said.

He said there was some interest from investors who were looking for returns rather than capital gains.

“Sometimes they will purchase sight unseen because they can appreciate how good their returns are,” he said.

It is a similar story at Nutrien Harcourts in Yarram.

Property manager Belinda Williams said they were finding their existing tenants were not moving, and consequently they had no rental vacancies.

“I think in the current climate tenants want to be secure, and are not even moving up to a bigger house or down-sizing.

“It’s hard for people coming in.

“We had a nurse who has just got a job at the hospital looking to rent, but there is just nothing.

“If people sell their property and have to move, its hard for them as well.

“There is really an opportunity for an investor to build a new investment property.

“If we had a new house we would probably have a dozen good tenants fighting over it,” she said.

The situation in Maffra is similar, with Country Road Real Estate principal Kevin Read confirming his firm had more inquiries for rentals than they had vacancies.

“The vacancy rate is partly down because of the time it’s taking to get a tenant in,” he said.

“When you have 10 or 20 expressions of interest in one property, it takes time.

“… there are not enough rental properties for the number of applicants.

Mr Read said for the past two years with the stock exchange booming there had not been a great deal of interest in bricks and mortar investment properties, but with term deposit interest rates so low and uncertainty in the stock market, he was getting a lot more investment inquiries.