An inner-west real estate agent has warned the local rental market could be headed for a “deeper and darker” phase with an increasing number of landlords looking to sell up.
Chief executive of Yarraville based Bond Estate Agents, Lee Marks, said the amount of rental providers looking to get out of the market had spiked in the past month.
“What we’ve noticed recently is that a lot of rental providers are starting to feel the pain financially,” said Mr Marks.
“People want out.”
He said the combined effect of interest rates, land tax and the cost of maintaining rental properties had finally become intolerable for many landlords.
“If you look at it from a financial perspective, for a million dollar loan at 6 per cent you’re looking at 6000 bucks per month in repayments and rentals at that level would only return at maximu, $3000 at that level so therefore the owners are out of pocket $3000 plus extra costs,” Mr Marks said.
“How is this sustainable?”
Mr Marks said the amount of landlords leaving the market had led to an oversupply in properties, evidence which was backed up by the Real Estate Institute of Victoria’s latest quarterly data which showed house prices declining across much of Hobsons Bay and Maribyrnong.
While this would appear to actually benefit renters by making it easier for them to buy property and become homeowners themselves, Mr Marks said it wasn’t that simple.
“It’s tricky to get a loan and property prices will have to decline significantly for renters to be able to get into the market,” he said.
“I think that there could be less properties on the market for rent and we’ll be entering a deeper and darker rental housing crisis.”
Mr Marks said he was already noticing the effects of this, with large crowds for rental open homes and more than 20 applications for each available property.
However, he said respite could be on the way.
“On the flip side post the Melbourne Cup spring carnival season we generally start to see a large influx of buyers entering the market and this generally keep the market steady up until the colder months should we not experience another interest rate hike.”
