Covid-19 has wreaked havoc on property markets across the world, and Melbourne has been no exception. Like all businesses we have seen several changes from the way we conduct daily business to the type of rental properties on the market. Here are some of the changes in the Rental game:
Technology: We have adopted remote routine inspections and may continue as COVID-19 restrictions are lifted.
This process would likely involve rotating between a remote and on-site inspection for each property or using virtual inspections for long-term tenants who have demonstrated a good tenancy history.
We have also seen a great response from the use of virtual tours and walkthrough video on property listings. Tenants like the option of viewing the property without having to take time of out their day to drive to the inspection. It is more efficient for the tenant and the property manager as the tenant can apply and be pre-approved for the property before stepping foot inside, this also means a quicker turn around for the landlord’s rental income.
A change in property availability: One of the major things we noticed at Greville Pabst Real Estate was the quick shift from owners to move their short-term rentals to permanent residential properties. The recent announcement in banning short-term holiday accommodation due to movement restrictions fast-tracked this change virtually overnight.
As a result, we have seen many fully furnished rentals hitting the market. These former Airbnb/short-term properties will be a new challenge for landlords. Those property owners who previously experienced high returns must be prepared for lower returns offering their properties as permanent rentals.
Depending on the area and demand, ex-Airbnb landlords may need to consider offloading existing furniture to broaden the market for their property.
As the world economy improves, increased travel and tourism could open the temptation for landlords to flip these properties back into the short-term rental market. The reality, however, is that the downturn in international visitors could be 12 months or more.
Pricing: We have seen a slight decline in rental prices in our long term fully furnished properties and apartments close to Universities as Australia’s student housing market is likely to also see a similar impact. With travel bans affecting international student enrolments
In times of high unemployment and market uncertainty, there is a shift in demand from higher-priced rental properties to lower priced. This has an impact on the higher-end suburbs, with properties now sitting vacant for longer periods.
Increasing demand for lower-end properties could potentially offset downward price pressure in this segment of the market. Overall, we have seen a fall in median & high-end rents across Melbourne.
Rental markets have been particularly dampened by falls in employment. Our lower-medium range properties have seen change as many of these properties are tenanted with workers from hospitality, airline, retail sectors that have been hit.
There’s little doubt there are very challenging times ahead for tenants, landlords, and Property Managers. Now more than ever we must ensure great communication, negotiation and support for both landlords and tenants.
With new legislation of bans on rental increases and tenant evictions, we will also see a flood in the market around early December as many agents and landlords across Victoria set to evict tenants once bans lift on September 29.
Strategic action around this time could mean the difference between a tenanted property and a vacant one.
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