A Bird in the Hand
Wednesday 18 Sep 2019
The expression ‘a bird in the hand is worth two in the bush’ may feel a little old fashioned and out-of-date but I believe the philosophy it promotes is actually highly relevant in the current residential property market. Here is why…
There is certainly increased activity across the residential property market at the moment which is incredibly good news. We are seeing a significant increase in inspections, registrations and bidding at auctions, clearance rates and, thankfully, listings.
That said our team are still urging vendors to be cautious when setting their price expectations. There remains some degree of buyer caution and price sensitivity so it is important for vendors to be realistic and in these circumstances, an auction campaign definitely provides the best opportunity to deliver a result that could well be above those expectations.
But I do have a word of caution for property investors as there is no doubt we are currently seeing some softening in rental returns.
I have always been confident the market can absorb the significant increase in new developments and apartments coming online and I do stand by that position in the longer term but it is important to highlight that there is strong competition for tenants across the rental market at the moment. We are finding renters are prepared to move buildings, even suburbs, to secure a better rental price.
So let’s cut to the chase. What does that mean?
Quite simply it means property owners need to be mindful when existing tenancy agreements come up for renewal and not automatically demand a higher rental return. To keep a good tenant in place and the property occupied might require the rent to be tweaked.
I’d like to highlight that Morton’s current property vacancy rate is running at 1.9% which is well below the industry average of 3.6%. That’s because our team are proactive in monitoring the market and providing landlords with the information they need to know so they can make informed decisions in advance of any tenancy renewal negotiations.
But right now it is very worthwhile considering that a bird in the hand may well be worth two in the bush.