Ewan's Blog

Is there a middle ground?

Tuesday 01 Dec 2015

Is there such a thing as middle ground? Research released last week on the rental market highlighted the issue of rental affordability, with particular focus in Sydney on the CBD and city fringe areas, areas in which Morton specialises in residential sales and property management.

Certainly when viewed in the context of rent costs as a percentage of average weekly earnings it is clear properties in those suburbs close to the CBD are out of reach of many.

So it does seem a little incongruous that as we read about the unaffordability of rental properties our Property Management team is reporting that rents have actually eased a little over the last few months as more stock comes onto the market.

That increase in supply has eased prices a little but demand is still very strong and our team continues to assure investors that returns remain healthy and the vacancy rate is still low at just 2%.

And certainly the rents being secured for property within the CBD and city foreshore reflect the financial investment made by owners. Whilst demand will always set the rent the underlying capital value of the property itself certainly influences the expectations of owners and Property Managers will unashamedly work to secure the best possible rental return.

It begs the question is there possibility of finding a middle ground between what appear to be very different real estate expectations: reasonable rents and healthy return on investment.

I am no expert in social housing models and their success or otherwise. I do know that Morton has been on the ground in the Pyrmont precinct as it has been developed over the last 20 years and the sense of community that exists in that area across all demographics is as strong as I have seen. And that sense of community is what attracts a significant proportion of property buyers to the area.

So if affordable housing can deliver an enhanced sense of local community it may well also deliver enhanced residential property value. Just how to achieve the perfect balance between the two will generate a debate I shall continue to watch with interest.