RENTAL MARKET WRAP
In the six months to 30 June 2024, a staggering 17,729 tenant enquiries and 2,482 rental applications were generated for rental homes listed with Blackshaw Real Estate. Thank you for continuing to entrust us with the management of your rental property and rest assured that our team are always working hard in the background to secure the strongest outcomes for you. Below is a snapshot of the current market conditions and proposed legislative changes that we thought you might like to be aware of.
1. Property price growth
According to Corelogic's August Home Value Index (HVI), national home values rose 0.5% in July, the 18th consecutive monthly increase. Locally, the ACT has seen a 1.7% increase in house price growth year-on-year, with the median house value now $870,910. While regional NSW saw 6.9% growth annually and a $630,565 median house value. For now, constraints on new housing supply are likely to keep a floor under home prices.
Gross rental yields are also sitting steady at an average of 4% in the ACT, and 4.2% in regional NSW. With house value growth in NSW outpacing rental growth, we could see some downward pressure on rental yields in regional areas.
2. Rental prices
Despite an overall easing of price growth nationally, Domain's latest rent report shows that rental prices for houses in the ACT have risen for the third consecutive quarter to a record $690 per week. Levels like this were last seen in December 2022, finally pushing annual gains into positive territory. Rental prices for ACT units however have fallen $10 to $560 per week, the first quarterly decline in four years. In Queanbeyan, the average price for a rental house is $650 per week and $420 for a unit, according to Domain. On the South Coast averages are $590 per week for houses and $416 for units.
Why are houses outperforming units?
The stronger performance of rental homes versus units reflects the trend toward tenants opting for larger properties with more bedrooms to accommodate share houses and multi-generational living arrangements amid the cost of living squeeze. Corelogic reports that a typical four-bedroom home is now renting for 3.3% more in the ACT and 6.1% more in NSW year-on-year, compared to smaller dwellings and units where there has been a substantial slowdown in the rental price growth.
3. Vacancy rates
- ACT: 2.1%
- Queanbeyan: 1.7%
- South Coast: 2.5%
- National average: 1.3%
(Source: Corelogic and SQM Research)
Canberra’s vacancy rate has consistently risen throughout 2024 and is currently the highest of all capital cities. Vacancy rates typically rise during winter months, with elevated stock levels contributing to slower rental price growth and more favourable conditions for tenants.
4. For rental properties in NSW
As you many have seen in the media, proposed legislative changes to prohibit no-fault evictions go to Parliament in coming weeks and may see NSW move in line with the ACT, VIC, QLD and SA. If passed, it will mean that:
- From 2025, NSW landlords will need to meet specific "commonsense and reasonable" criteria to evict tenants, including selling the property, the owner/their family moving in, lease breaches, significant repairs, renovations, or if the property is no longer a rental. Tenancies can also end if the renter is no longer eligible for affordable housing or student accommodation.
- Landlords will need to provide proof when issuing an eviction notice and could face penalties for non-genuine reasons (yet to be announced). These breaches won’t be monitored by an official body but investigated when complaints are made.
5. For rental properties in the ACT
CPI figures released last week mean that the new prescribed rental increase amount for lease agreements due for renewal over the next 12 months is 0.99%. The Real Estate Institute of the ACT is advocating on behalf of landlords for a revision of the current rent cap legislation but has noted that change is unlikely in the short term given the impending ACT election.
Additionally, the consultation period has opened regarding proposed minimum standards for rental properties and it’s important for you to have your say. While some of the proposed changes are basic (e.g. having access to a toilet), others could have a large impact, such as minimum energy efficiency ratings on appliances and full weather sealing. The consultation paper can be found here.
Please go to the Your Say website where you can provide your feedback by doing any of the following:
completing the short survey
leaving a quick comment on the page
uploading a long-form submission
writing to civilconsultation@act.gov.au
Consultation closes on 2nd September.
With the ACT election on the horizon, various policy promises are emerging in relation to property. ACT Labor is committing to abolish stamp duty for first home buyers, pensioners, off-the-plan unit-titled purchases, and vacant land purchases for new houses regardless of the buyer's income or value of the property, as long as it is the buyer's principal place of residence, as well as accelerating land release to build 30,000 more homes by 2030. The Liberals are looking at capping rate increases for existing dwellings, while the Greens plan to establish a Government developer and builder framework to boost social and affordable housing.
Watch this space for further developments.
6. Preparing your tax return
On a final note, if you are still looking to prepare your annual tax return, the Tax Time Investors Toolkit may be a useful resource. With the ATO citing high rental reporting error rates in previous years, the toolkit provides guidance on reporting repairs and capital improvements, getting capital gains right, how to claim things like interest on your loan, borrowing expenses, purchase costs and body corporate fees, as well as apportioning expenses and income for co-owned properties and private use.
Please get in touch
As always, we are here to help. Reach out to your Property Manager or your local Blackshaw Real Estate office for help and advice.
For any further information or queries please contact your Blackshaw Property Manager.
