Independent Property Group is working with landlords to explain what’s happening in the Canberra market at the moment, which isn’t experiencing the rental shortage troubling other major cities. Photo: Independent Property Group.
As major Australian cities grapple with rental shortages, landlords in the nation’s capital are coming to terms with a contrasting reality, according to one expert.
Independent Property Group’s General Manager of Property Management Monika Minko says it’s a different story in the national capital, where an oversupply and stubbornly high rents are driving the average on-market period up for rentals.
“There’s no rental shortage in Canberra – if anything, there’s an oversupply. The issues people are having with securing affordable accommodation relate to prices,” she says.
“The vacancy rate in the ACT is sitting around 2.9 per cent at the moment. That’s quite high in comparison to what we had even 12 months ago, and the highest of all capital cities in the country. It’s a bit of a hangover from the COVID-19 times when people came to Canberra and paid those prices.
“Many investors are finding it hard to accept.”
Monika says landlords whose investments were snapped up at high rentals during COVID have been surprised by the backswing. In some suburbs, prices have swung back as much as 10 per cent.
It’s a bitter pill for investors facing high interest rates, but digging in could end up costing more than that extra rent is worth.
It’s a simple matter of mathematics.
“Often we’ll advise landlords to drop those rental prices by maybe $20, and we’ll have a tenant in there by the end of the week. That’s $1040 over the year. That same property only needs to sit vacant for three weeks and you’re worse off,” Monika says.
“We spend a lot of the time working with landlords, laying out what’s happening in the market at the moment. Properties that were being snapped up at the peak are now sitting vacant for four weeks and accumulating losses.
“It is important for landlords to manage their expectations in line with current market conditions to get the best outcomes in the end.
“The headlines we’re seeing in the media about rental shortages tend to be based on other capital cities like Sydney and Melbourne. The Canberra property market is a very different beast.”
Monika says the cost of living crisis and relocation patterns are major factors impacting Canberra’s current oversupply.
“People can’t afford expensive rentals any longer because they’re paying more for everything else. They understandably prefer to spend that extra $100 a fortnight on groceries,” she says.
“We also don’t have as many people making that tree change to Canberra as we had during COVID.”
Independent Property Group’s Monika Minko implores landlords to work with their property managers to get the best outcome. Photo: Independent Property Group.
But one thing is always true about the property market – it operates in cycles, and the oversupply isn’t permanent.
“Rentals will eventually rally, and you’re not locked into a rental price forever. The rates you negotiate today won’t necessarily be the rate you’re able to negotiate in 12 months’ time,” Monika says.
“Interest rates are on hold for now, and that has a massive influence on prices. We can only wait and see what happens next. In the meantime, it’s best to get a tenant into your property to help cover the bills.
“Work with your property manager to understand the current market – we are in the property market on a daily basis, and we’re ultimately looking for the best outcome for our clients.”
For more information, contact Independent Property Group.
Loading ...
