What impact is the tightening rental market and rising rents having on renters attitudes?
In 2021, the Melbourne apartment rental market became very tenant friendly. The market rent fell and there were large vacancies. Renters had the upper hand and were safe in the knowledge, they would almost always be offered a further term which created accommodation complacency.
During Covid most property investment owners were understanding to renters requests for rent reductions or relief. Some requests were due to genuine hardship but as the market fell, many renters became more opportunistic. Agreements were made commercially and often outside the rental rules, just to get everyone through.
Fast forward to October 2022 and the market has flipped. Rents are rising, vacancies are low and we are starting to see queues of people at some inspections. Renters are becoming more desperate to secure a home. What impact do you think this will now have on renter and owner behaviour and how will they react to rising rents?
Anecdotally we are seeing a more conciliatory attitude from most tenants. They can feel the tightening rental market rise around them. Rental arrears are down, vacancies are down and rents are rising.
In 2021, some renters moved into an apartment that was unattainable in any normal market. Now some are struggling to keep up with rent rises and may need to move to accommodation closer to their budget.
The change in rent for currently leased apartments happens slowly however. The notice period for rent increases is 60 days and can only take place at the end of lease (or during a month-to-month lease) and a maximum of once a year. The market is expected to tighten further over the next 12 months.
Expect to see more news reporting on housing shortages like the recent story on 4 Corners highlighting the housing crises in Coffs Harbour.