Rising Rents

It's a fact of real estate - it's historically been a very solid investment. Property's will rise in value (over the long term) and with it - if it is tenanted - rents will rise along with it.

I think it's interesting that just the other day Tony wrote a blog post about vacancy rates in Melbourne, and here I am writing about rent increases in Melbourne. How does that work? That's the frustrating thing about Real Estate, you talk to two different people, you get two different perspectives. I might write more about this topic in the future.

Nevertheless, I came across information about rising rents and vacancy rates and wanted to share this with you.

So what increases are we looking at and where are the key locations? Fairfield in Melbourne along with Edgecliff in Sydney are the front runners, up by 13% and 11% respectively. 

This translates to an increase of $60 in rent per week, compared to 12 months ago. With 24 suburbs in Sydney and 18 suburbs in Melbourne having seen rent increases of more than 6% for new tenants.

It's been reported that the median rent for a house in Sydney has reached a record of $500 per week and apartments $460 per week. The national average for a house is $411 per week

It appears also, that apartments are becoming more and more competitive because renting an apartment is a slightly less expensive option, than renting a house. Couple that with Gen Y's desires to live in inner city locations, places which are close to cafes, beaches and transport, plus Sydney's housing shortage and lower unemployment rates it's no wonder apartments are going gangbusters.

To add to that good news, the vacancy rate in Sydney has consistently hovered around 1.5% for the second half of 2011.

So if you have property in these sort after areas, and you haven't had a rental review in the last 12 - 18 months or so, it might be time to talk to your property manager about this. But be conservative about raising rents 'because everyone else is'. You may turn off prospective tenants.

If you're a prospective tenant, to improve your chances in the competitive renting market, make sure you look at doing the following:

• Have your application form filled in and ready to go on the day of the inspection - most agents have downloadable applications online.
• Bring copies of references from previous property managers or landlords.
• If you have pets, bring references for them too (and photographs, if you can). You can get a pet reference from past property managers, landlords or your dog walker. (see our pet friendly post for ideas)
• Bring a print-out of your rental ledger – your current property manager can provide you with this.
• Dress well for the inspection and feel free to ask questions.
• Be willing to move in as soon as the property becomes vacant.
• Be ready to pay the holding fee if your application is approved.

So do you have property in Melbourne and Sydney? have you benefited from these rises in rents? Or are these statistics a bit off in your opinion?