Investors are coming back

Mark Guthrie

Ray White Cheltenham and Cranbourne CEO

The focus of the real estate market for the last few years has been the sales side but the activity and movement in the rental side is one that can't be missed and shouldn't be dismissed.

The rental market has seen many changes over the last two years in Victoria with major changes to legislation. The combination of these changes (many that were poorly presented to landlords) , some increased costs, rent price freezes, and the dramatic increase in property prices has meant we have seen a large number of landlords / rental providers sell their properties.

Who would blame people for wanting to take advantage of this situation. The ongoing impact that we are now starting to see in Victoria of this though, is a massive increase in demand for rental properties. This is leading to dramatic increases in rental prices, in many cases increases of $50 per week on properties previously renting for $400 per week is not uncommon. We are also seeing very low days on market, and large numbers of applications per property. With this cost of living increasing in other parts of our lives too (petrol jumping to mind) it is causing distress for many.

What does this mean for the future? Interest rates are still extremely low (yes they will increase but only back to normal levels) and with the increased prices for rent now is the perfect time for investors to jump back into the market. The increased interest rates will cause some stress for those paying mortgages when their borrowing percentage is high, and we will only see an increase in tenants in the future. It's a fact that if you have been a property owner for the last 10 years you haven't seen anything but an interest rate decrease, and these increases in the coming months will cause some stress.

Overall we are definitely in a transition phase and these are always the best times to take advantage of the situation. Those that sit on their hands will rue the missed opportunities and those that make a move now will reap the rewards in the future, which one will you be?