Sydney Home Prices Fall most in 30 Years
Sydney and the New South Wales district is beautiful, a destination of dreams for global travelers wishing to sample the lifestyle and unique economy of Southeast Australia.
Change creates opportunities. And for investors and property managers, it’s these times of change that create buying and management opportunities in single detached rentals and multifamily properties.
The latest Sydney housing report for November is a little depressing for current owners, realtors and property managers. Real estate prices have plummeted in 3 major Australian cities and more is predicted for 2019.
It’s Not Just Sydney where Prices are Sliding Fast
These record breaking declines are showing up in several housing markets already. November’s stats are a sharp reversal of October’s.
The question is whether the fallout will be even worse for the rental market in 2019. Rents as seen below, are starting to fall, -3.6% within Sydney in November for house rentals and -3.3% for apartments in Hobart which had been performing very strong.
Australia’s housing market is highly fragmented with some markets showing their own unique demand and supply dynamics however will they be next?
Optimizing Operations to Survive
Australian property managers will be focusing streamlining operations and attracting and retaining tenants. Now more than ever, Australian property managers Sydney, Perth and Melbourne are having their businesses tested to the extreme.
With Australian rents falling, vacancies and evictions rising, and cash flows interrupted, property managers will be under big pressure to maintain ROI and keep owners happy. Good software is one way to deal with it. The rest is strategy in creating property management leads, improving rent yields, and tenant retention.
With a glut of apartments being introduced, slowing immigration, and the slowdown in the economy, landlord and property managers have to reorganize. Hopefully you won’t be laying off staff, and new Proptech solutions can streamline and optimize your accounting, payment process, and maintenance ticket system to free up time.
November House Prices Fall
Last month, house prices declined 1.3% in Sydney, and slumped .9% in Melbourne. This peak to trough plummet is worse than the recession of 1989 to 1991. As of December 10th, the peak to trough difference is a full 10%. Lending to investors is down 1.3% as well.
A lack of buying from foreign buyers is considered a key reason for the drop. Other Australian housing markets haven’t experienced the same precipitous drops in prices.
Rent Prices in Sydney Plummet
News.com.au reports that desperate landlords in Sydney are offering tenants up to 4 weeks free rent just for signing new leases. They estimate the vacancy rate is up to 10% in some areas. This puts negotiating power in the hands of those looking for apartments in the city. And in recent years, tenant resentment has climbed.
Those hoping to renegotiate their leases will find a greater variety of offers and incentives as landlords try to hold onto their tenants.
At present, of the major metros of Sydney and Brisbane are seeing price drops of 3.6% and 1.5% respectively, while Melbourne has been flat. And Rent.com.au reports that it’s taking much longer to rent an apartment or home (23% longer – apartments, 22% longer for houses). The number of apartments for rent is up almost 13% and the number of houses for rent rose by almost 4%.
The price of apartment rentals in Australia is low compared to US apartment prices, but in terms of percentage declines will be just as painful to property investors and property managers. While many regions have seen their rents rise strongly, New South Wales rents are flat, as well as being the priciest in the country.
Complicating the picture may be the movement of those selling their homes to rent an apartment. Good for you as a property manager, however you may still need to offer incentives, free rent, and other inducements.
Predictions for Australia’s Diverse Housing Markets in 2019
What are the predictions for the Australian housing market in 2019? Will the economy see a hard landing, and collapse of the housing sector? The OECD believes an Australian housing crash is possible and are warning of a dire situation for Australian banks. Trade wars between the EU, USA and China could send bigger ripples to Australia.
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