The rental market in Sydney’s Inner West is truly dynamic, and the first few months of 2024 have proven no different. The area has experienced robust momentum in the property investment space, with escalating demand for rental properties, particularly those boasting outdoor living spaces, and a surge in urgency, palpable.
Undoubtedly, property markets all perform quite differently. While there are generalisations about trends in specific cities, these cities have many little sub-segments with their own characteristics. It’s so important to know and speak about your local market and identify your strengths in that market.
According to Joe Amendolia, an Advisory Board member at Vogue Property Management situated in the heart of the Inner West, not only has the quantity of enquiries increased, but there’s a notable rush to secure rental properties. Private inspections and additional open times have had to be arranged due to tenants’ reluctance to wait for the traditional mid-week or Saturday opens.
“There seems to be almost panic-driven, ‘first-in, best-dressed’ behaviour with those who missed out on one property waiting by their phones for the next listing so they can be the first to inspect,” he says. “People are realising there’s such a shortage in rental stock that they need a very strong and quick application submitted before anybody else does.”
Subsequently, prospective tenants are proving to be exceptionally prepared, with relevant documentation ready to go and promptly submitting applications.
Property management in a challenging market warrants exceptional attention to detail, and the fact that tenants are on the front foot strongly highlights the need for proactive property management strategies that facilitate seamless transactions and optimise outcomes for all parties.
Improving the property’s overall value is crucial to increasing its appeal, capital value and rental return. Surprisingly, requests for repairs and maintenance have decreased in recent months, indicating tenants’ willingness to address minor maintenance issues independently. Unless it’s a major repair, like a hot water system blow-up or a dishwasher not working, the requests for minor repairs, like light bulbs and leaky taps, have decreased significantly.
With rising living costs impacting everyone, subsequent rental increases are, unfortunately, necessary for many landlords. Considerable due diligence has been undertaken around portfolio management, with analysis and rent adjustments made where possible to meet the comparable market.
Rent adjustments are meticulously aligned with market trends and supported by comprehensive analysis. “It’s not a matter of increasing rents for the sake of it. We’re owners ourselves, so we understand many people are doing it tough due to the interest rate environment,” Joe explained. “We gather a lot of evidence to support our rents and increase our rates when needed. We are conscious of our tenants’ concerns, so we are proactive in working closely with them to explain, in person and in detail, why the increase is occurring,” he says.
Property managers at Vogue Property Management are concerned about people’s spending habits and behaviours and have strategies to assist with budgeting and cash flow. We help tenants make informed decisions based on their specific circumstances before any rate changes to mitigate any negative impact as best as possible.
In the last quarter, gross rental yields in Sydney at the end of March stood at 2.7% for houses and 4.0% for units, as reported by CoreLogic.
Recently, a notable three bedroom, two bathroom, two car sub-penthouse apartment in Waterloo defied all odds from a recent comparable in the same building on a similar level. Despite initial comparable rents of circa $1,200 per week, within three days, offers well above the asking price were received between $1,600 and $1,700 per week. With the apartment tenanted almost immediately, this highlighted the premium placed on exceptional properties.
Vacancy rates have remained exceptionally low over recent months, with Vogue’s portfolio boasting a vacancy rate of less than 1%.
“We currently only have one property to rent, so our vacancy is less than 1% of the portfolio, and arrears are very good too. No one wants to fall into arrears and risk being evicted or hampered by their real estate agent,” Joe shared.
Vogue Property Management is a bespoke specialist solely focusing on investment property management. Free from external agendas, corporate shareholders, and sales teams, our career property professionals live, work, and invest locally. They’re dedicated to achieving the highest possible returns for their clients’ properties. We know how property assets should be managed efficiently, which makes a huge difference.
As we head into the next quarter, the Inner West rental market is poised for continued stability and resilience. With vacancy rates at historic lows and sustained demand for quality properties, investors may anticipate favourable conditions for capitalising on lucrative opportunities. Joe believes that as confidence in interest rate stability grows, the investor market is primed for renewed activity, signalling a promising outlook for the months ahead.
“We may see the investor market come alive again in the next few months with many investors realising that the next interest rate change will be heading south,” he says.
Contact our dedicated team for more information about how we can help you maximise the value of your investment property.