Ewan's Blog

Get it right.

Tuesday 13 Oct 2015

Let's get one thing straight. As much as I know they would love it to be true. As much as I would love it to be true. It just isn't true. Property owners do not automatically get to set the value of the rent they want for their property based on the price they paid for it. It just doesn't happen that way. We still live in a world where supply and demand sets the price, not the owner.

So let's talk rent given it has been in the news.

Across our market they're holding. Yes I know the latest stats say they have increased across Sydney, which now boasts the highest average rent in the country, but in the CBD and city fringe market they are holding.

That might sound disappointing but it is important to look at the specifics in a bit more detail because in actual fact I think 'holding firm' is a pretty amazing reflection on the long term rental market strength of the precinct.

Because it is undeniable that we are in the upswing of the development cycle with a substantial influx of new properties are coming online across the CBD. There is more stock to choose from so what we are seeing is an increase in supply that is being balanced by an increase in demand.

That's great news for the continuing long term viability of investment property in the area as it demonstrates the ongoing, and indeed growing, appeal of CBD and city fringe living.

It is the ultimate demonstration of the concept 'if you build it they will come' which is fabulous but certainly not always guaranteed. As I have already said I dispute the notion proposed in some of the media reports last week that rents are rising on the back of property owners requiring higher returns to justify their investment. That’s not how it works.

Rents are holding for properties that are well positioned, well serviced and well maintained. The key will always be to buy the right property for the right price and then demand will set the rent at the right level.