Will apartment rents keep rising? Live on 3AW

Apartment rents have been volitile over the last few years. Lately they have risen sharply and everyone wants to know if they will keep rising.

Listen here or you can read the transcript below.

On afternoons on 3AW afternoons, the property update, thanks to Wood Property apartments make it possible, and Wood property makes apartments easy.

Every second Tuesday, I’m gonna be chatting all things property with Andrew Wood, managing director of Wood Properties 133 693. It is a constant topic of conversation in Melbourne apart from the footy or the weather, we just love talking about property. It’s where are you? How hard has it been to find a place to live? If you’ve got a question, you need to speak to an expert and that expert sits in front of me. Good afternoon, Mr. Wood.

Good day, Tony. How are you? I didn’t realise you’re from Mildura?

Well we emigrated there in 73. And spent the best part of a decade there. So I went to school there, but we holidayed in Swan Hill.

One of the best places in the world.

At the Flag Inn.

Oh did you?

Do you remember the Flag Inn?

I do, is it still there?

I wanted to ask you whether or not the military museum that had a Japanese tank out the front. My uncle actually ran the military museum. Would you believe it, Alan?

Really. And it’s not there anymore, I don’t think.

It’s not there anymore, and unfortunately Uncle Alan’s no longer with us anymore. Yeah, he ran the military museum. So yeah, it was a great little institution, wasn’t it? That and the Pioneer settlement. They you know, I’m right in thinking it was a Japanese miniature tank at the front, wasn’t it?

There was a lot of artifacts in there and yeah, you had quite a number of them. So yeah, it was fantastic.

So that was I think the furthest the Japanese army got, they got to Swan Hill they booked in at the Swan, the Flag Motor Inn. And then we’re politely asked to leave.

Yes, I think.

A little too much going on.

There could have been the case, but no, we had the local real estate office in Swan Hill for many years. Dates back to my, uh, great grandfather. So 200 years for your family. In the business. Yeah. Yeah, yeah. Yeah. It’s amazing, isn’t it? 4 generations.

There’s some sort of record.

How were you? You know, the old man said that, right? That’s it you’re getting into. Real estate or? Or do. You just gravitate towards it.

We’re all given, you know, all encouraged to, to follow our dreams. But as it was for four out of five of my brothers, actually. Were in real. Right. So I don’t know, there’s some sort of attraction, but we all worked at the office. I started as a, you know, delivery boy at the age of 12 or something after school, delivering letters and emptying our bins and things, so. It’s a. It’s a. It’s, you know, it’s a very good experience and and we used to learn the auctioneering trade out on the back of a truck at clearing sales. They probably don’t have clearing sales anymore, I’d assume out. Farms. So now that the Internet does its thing, but it was a fantastic experience. We loved it. They were great.

Days it’s a remarkable industry. Like I said, it’s a constant topic of conversation. So what questions are you asked when people meet you? They say g’day, Andrew. They find out you do real estate. What’s the first question you would?

Generally get asked. Yeah, well would probably focus on the apartment market. Specifically, and that is a hot topic of discussion as well, rather than just the, you know, broader property market but within apartments there are some some nuances and you know there’s just been this the rental market over the last I don’t know where are we since COVID. Sort of four or five years? Yeah, just.

It’s been the most, you know, sort of volatile market that I’ve ever seen.

Can we unpack that? Because I’m confused about the messaging that you get 133693. By the way, if you’ve got any question about property in particular apartments, you want to speak to Andrew, what about who’s managing director Wood properties? We’re told that there’s oversupply, and yet people are queuing forever. To apply for apartments, what is the actual situation?

Well. It’s really all around population, so during COVID, you know everybody left Melbourne either we need to stayed overseas into the country, whatever and the population fell like a stone and so did rents. So rents dropped. And I remember to the day when, you know, there were incentive, there were provisions brought in by the Victorian Government. You couldn’t ask people to move out, you couldn’t increase their rent. All this sort of stuff. They could get rental relief if they’d lost their job and just going up and said I want my rent reduced and we said sure if you lost your job, fill out the form. You know, give us the case. And he said no, no, no. There’s just. 1. Across the road, $50 a week less so. Either I’m moving or you drop my rent. So the rents fell and they fell by 30% and then obviously at the end of COVID, everybody came back and the rents have just skyrocketed since and they went well past pre COVID levels. So it is really around demand. The supply hasn’t changed. There is no more housing in the broad sense of terms than there was in April. So really the the a lot of the rise has actually been from the depths of COVID through, but now we’ve gone past that and really the other problem that’s happening at the moment, Tony, is the you know additional costs and requirements, whether there’s some compliance requirements from investment owners to provide the housing. For accommodation have increased so the cost for owners is increased, which means a lot of investors or a number of investors are. Saying well look. It’s it’s, it’s it’s too much. I’m not making any money out of the apartment anymore. I’m gonna sell it. So the actual rental stock is reducing, which is really bad news for renters, obviously, because it’s just not as many, many properties. But to come back to your original. You know, for example, on the weekend we had 26 apartments I think for lease we had about 95 people across the total, which is what’s that three, that’s 4 1/2.

Per yeah, yeah. Roughly four people per property.

Or something. To the. Property. So the the. Properties available for rent, I mean the answer is you know there is properties. I think it’s probably around choices people are wanting to prefer to live in certain areas, certain types of property and they will be you know the most sought after. So it’s really you know housing choices as well as actually housing supply I Think 133693. Andrew Woods family has been in the property industry for a century, so he knows what he’s talking about. Give him a call if you’ve got any query. Sorry about the real estate market. Sue, go ahead.

Yeah. Hi. Look, our son is wanting to move out of home. He’s 29. He’s cashed up, but he’s got no rental history. So we have offered to go on the lease with him. We’ve offered six months rent in advance. We’ve offered everything, and he keeps missing out. And like, we’re kind of, we just know what else to do.

Yeah, that’s a tricky situation. So. Like I, there’s a lot of tips and things about actually trying to, you know, be successful in a rental application. I’d suggest that you stay really close to the leasing agents that you’re meeting. Talk to them, get to know them, build that relationship with them, explain what’s going on. That’s really the best thing that you can do is just is, is, let them know the story and and build that relationship with them. So when your application lands, it’s not just some faceless, you know. Application. They actually got a relationship and the story that they can attach to it would be my my advice.

OK. Thank you very much.

Thanks all good.

Luck. Good luck with that, Sue. Moving out at 29 is are we moving out later and is that is it a bit chicken and egg that people staying at home like Sue Son in order to save that money to then. Now keep in mind he’s not moving out into apartment that he’s buying he’s he’s renting. Yeah. So is is that. What’s the reverse of empty nesters? Whatever that is, I don’t know, but.
It’s actually interesting. So you know, flatmates, the site that people look to share houses on, so their numbers are are are record numbers and they are seeing a lot more. So really lengthwise and people just, you know, look for other options. So if it’s actually sharing a house, then it’s sharing a house. And so there’s more people.

Yeah.

And flatmates looking to share houses. Then perhaps what they might have otherwise done, which is tried to, you know, rent a property on their. And or or with a friend that they know but you know. And there’s also very different demographics that are actually looking we’re seeing. It’s usually a young person’s demographic that would be on flatmates. We’re now seeing a map much older, in fact, 50 plus demographic is the highest in increasing number of people on flatmates.

What impact is high interest rates having in mortgage foreclosures and that sort of thing? Is that having an impact on the on the rental market as?

Far as apartments go. Yeah. Well, it’s. Well, the higher interest rates is sort of one part of the story. There’s also land tax, which has come in for properties and they reduce the threshold down to 50,000. So a lot of apartments with a site value. To between 50 and 300,000 were not getting the land tax bill, so now they are. So that’s there. There’s the compliance costs. There’s obviously interest rates which have been up high for some time. So if they are selling their property, the buyers are all owner owner occupiers. In other words, people wanting to move into the property, yeah, the actual. CBA’s stats on investment lending is 10%, so 10% of all investment loans are. Posters in WA it’s about 75%, so you can see what’s going.

On in Victoria. Wow. Andrew, you’ll be back in a fortnight, so you’ll be taking questions from people then. In the meantime, go well and. I’ll talk to.

You then sounds good.

Thanks Danny. Andrew Wood from wood property talking about real estate, that’s a new segment that will do every fortnight here on afternoons. Back in a moment, it is 14 minutes to three.