29 Jan 2021 off to a Great Start
We are delighted to see a rebounding of activity in the first few weeks of 2021 with more tenants and buyers out on the streets looking for an apartment to call home. While they remain price sensitive and are selective on quality, apartments are leasing and selling faster now than last year. The buyers are almost all owner occupiers with first home buyers leading the charge and loving the low interest rates and tax concessions available to them.
New buyers are entering the market and apartment values are being caught up in the recent “catch up surge” in houses and regional areas which makes them look good value and generally affordable.
The apartment rental market was one of the most impacted in 2020. A lingering frustration for some owners has been the unwinding of Covid / hardship agreements with tenants. These arrangements varied but most of them provided the tenant with a rent reduction for a period of time before returning to the original rent. (This also entitled the tenant to apply for a government grant to fund some of the rent). Tenants are mostly honouring the deal but in many instances the actual market rent has fallen during that time and by about the same amount as the hardship reduction. This means that the reduced “Covid relief” rent is now similar to the market rent.
The temporary legislation protecting tenants is scheduled to finish around the end of March 2021 but we are still seeing new requests for a Covid hardship rent reduction or negotiating extensions to prior arrangements where the tenants continue to be impacted.
We obviously hope as the wheels of commerce spin back into action quickly and market rents start to recover but we anticipate the full recovery will need a return of confidence with regular international and interstate travel and a full calendar of Melbourne’s renowned sporting and cultural events. I suspect this might not be until later this year or 2022 but if last year taught us anything it was that markets are almost impossible to forecast and the market reacts in unpredictable ways both positively and negatively.
We are committed to regularly update you on what we are seeing in the market throughout the year to keep you informed and help your decision making.