The Melbourne property investment market is back in town. We have seen a resurgence of activity in the investment sector in inner Melbourne. Anecdotally this is being driven by the demand for rental properties by tenants, the reserve banks reduction in interest rates and coupled to what we are seeing as a willingness by banks to lend on quality assets to clients whose gearing is conservative.
Investors are actively re entering the investment market searching for quality rental stock. Interest rates have corrected and many investors are seeing opportunities that have not been a round for several years.
At open for inspections for rental properties the numbers have been very solid and many of the properties in the lower per week rental sector receive multiple applications.
The upper end of the rental market, above $1,200 per week has seen a softening in demand and consequently many of these properties that would have rented very easily a few years ago are taking somewhat longer to find a tenant. Landlords have to re set their sights and be prepared to take a lesser rental to get the property tenanted.
Corporate middle level management is being restructured as a result of the global finance issues and this has allowed many business to restructure and has created some uncertainly among the ranks of middle to upper management and as such many would be tenants are reluctant to commit to the hefty rental they once would have done so without a second thought. Upper end tenants have started to live within their means.
The last RIEV report (December 2008 quarter) suggests that the vacancy rates for inner Melbourne have tightened from 1.1% to 1% while the middle and outer suburbs have eased from 1.3% to 1.6% and 0.09% to 1.1% respectively. With the disastrous fire situation in Victoria along with softening of the economy we see the demand for rental properties getting stronger in those outer suburbs that have been affected. Also with the increase in population, and decreased building activity should keep other areas strong also.
Melanie Dennis – Director – Domain Property Advocates
REIV / The Age - Property Manager of the Year
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