The surge of returning students by the end of February is set to squeeze rental markets further, particularly in Sydney, Melbourne, and Adelaide.
Raine & Horne co-principal in Newtown Gerald Hill said vacancies in the long-term rental markets in Sydney’s Inner West remain tight, with vacancy rates under 1%.
“We currently have less than 20 properties out of 1800 available for rent or about to become vacant, with as many as 30 groups at inspections,” he said.
“We expect vacancy rates will be squeezed further as new and existing university students flood the rental market in February looking for mostly shared home-type accommodation.”
Rebalancing NSW’s tenancy laws
Mr Hill said the changes in tenancy laws in New South Wales have contributed to the changing behaviours of tenants and landlords.
He said the tenancy laws introduced in 2020 “skewed” the market in favour of tenants.
The rules mandated tenants to pay certain weeks of rent by breaking rental agreements before termination. For instance, tenants are required to pay four weeks rent if less than 25% of the agreement has expired.
“Previously, tenants who wished to break a lease had to pay the rent until a new renter was found, but under the new rules, they can pay a few bucks and be out of the agreement,” Mr Hill said.
“For many landlords, the higher vacancies risks created by these new rules encouraged them to put their properties into the short-term holiday market with the likes of Airbnb and Stayz, contributing to tight vacancies that are truly off the charts.”
Melbourne rental markets at a fever pitch
Raine & Horne managing director for Victoria Randolph Clements said rental markets in Melbourne are also tight, with vacancy rates at a “fever pitch” levels of under 2%.
“In Melbourne, we have 30 to 40 people applying for a single property, and with this level of demand, people are missing out,” he said.
“This situation will be exacerbated by the return of students to our universities, whether in inner suburbs around the University of Melbourne, Monash, RMIT, La Trobe and the major TAFES.”
Mr Clements said some parents help younger tenants with no rental history by paying a slightly bigger bond, which is fully refundable if the tenants look after the property.
“The bigger bond gives landlords more security, and it is a strategy that can push younger renters up the queue,” he said.
Adelaide to feel the pressure due to surge in foreign students
Raine & Horne principal for Adelaide City Trinity McNamara said the vacancy rates in inner-city suburbs are already under 2%, substantially lower than in other parts of the South Australian capital.
“If we had more properties to manage, there’s no doubt we would find tenants quickly in this market — that said, it will be a challenge for all these students to find accommodation.”
Mr McNamara said there are ways, however, that can help give these students edge and the first step is to contact a professional property manager.
“It might also help to involve mum and dad, especially if you’re a first-time tenant without any rental history — a written guarantee from parents can help push a younger prospective tenant up the queue,” he said.
“Also, treat attending a rental open for inspection like a job interview. Whether you’re an experienced tenant or a newbie, if you turn up from a worksite wearing grubby work boots and trudge mud and dirt through the property, it sends a message that you won’t look after the property.”
Photo by Padmathilaka Wanigasekara from Pexels.