“We wish to advise; we have taken an application for your property. The proposed tenants are willing to pay 12 months up front, with a 13.3% rental price increase from last tenant.”
The rental market has gone bonkers!
Earlier this week one of our properties had a rental application delivered to our rental manager. The property had become available for leasing only one week before, through a break lease situation.
The existing tenants had been in our property for some time and were now looking to buy their own home.
As part of the update of lease etc, the property manager approached us with an amended leasing figure, an increase of 13.3%.
When we queried the price, they adamantly provided feedback to show that in fact the market range was currently between 13.3% and 16% more than what we had been renting it to the last tenants for.
Sure enough, they were right. The last lease was not very old, and yet the current rental demand was such, that the price had been pushed up substantially.
Over $100 per week substantially!
The new applicants were moving from Melbourne to the Sunshine Coast and needed to settle quickly, hence the offer of 12 months upfront.
In February 2020, the outlook was very dull.
12 months on, what I see happening in the rental markets right now I have not seen since early 2000’s.
Coincidentally, that is about 18 years ago, the same length of time as a full property cycle. (If you want to know more about property cycles, click here for this article)
Late last year, one of my mates moved from regional Queensland back to the Sunshine Coast for work.
It took him 3 months to find a rental.
Another Sunshine Coast local friend, had their lease not-renewed due to the property owners moving back in. They were given 2 months’ notice and could not find anything.
They are now living with a family member in a spare room of their house.
A family of 4 in a spare room.
My buddy at Rockhampton who runs the largest agency in town, said to me this morning that he has never seen anything like it before.
“Absolutely nuts”, was his word, “probably like the rest of the country”.
He went on to say, “I am convinced in 3 years a can of Coke will cost us $8”.
(Ahhh inflation and asset prices, that is a topic for another scribbles..)
Where does this leave the property outlook for 2021 and what hope can I give you, in the first edition of Scotty’s Scribbles this year?
I won’t give specific predictions outside of the general trends as defined by the overall property cycle clock. (As mentioned above, click here to read an old article on that and click here to watch a video from 2 years ago about what is going to happen this year.)
However, as it’s always the question I am most asked at the start of the year, in next week’s Scribbles I will outline the forecast for property in 2021 according to the macro property cycle.
Keep an eye out for that email next Saturday.
Here’s to a great 2021.
Must be better than 2020 right!
Since 2004 Scotty North has been helping people buy the best properties for their needs at prices that simply speak for themselves.
Scott has been instrumental in bridging the gap between financial planning and traditional real estate transactions through his property advice model.
Scotty North is a Qualified Property Investment Advisor (QPIA), with accreditation’s in financial planning, mortgage broking and real estate.
By carefully considering his clients’ goals and planning for market changes via demographics and trends, Scott designs a future proof outcome not only specific to the client’s needs but dynamic in its execution with performance indicators and exit strategies built in.
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