Australian property managers were surveyed to determine the true mood of the national rental market with the response overwhelmingly stating that while the market might be doing well, businesses are concerned by rent roll growth and profitability.
From the top-down, principals to early-experienced property managers reported on the market conditions they had been experiencing.
Console Cloud rental insights expert Natasha Anich, said the business had been actively monitoring the Australian rental market over the past three years and felt the country needed a ‘mood snapshot’ of the rental market.
“The clear message from property experts is that the rental crisis is real. Vacancy rates have hit all-time lows in suburban Australia with some suburbs reporting zero availability,” Ms Anich said.
“The State of the Australian Rental Market Report told us 70 per cent of respondents agreed that a lack of available properties posed a significant problem for renters.
“Similarly, 45 per cent of respondents told us that a lack of rent roll growth threatened the livelihood of their business while 22 per cent said profitability was a concern.”
The response indicated that the rental market might not have been performing as well as it seemed.
“Across the country, there have been signs of rental market bounce back,” Ms Anich said.
“In February, our data snapshot told us that the Australian rental market experienced an average increase of 0.31 per cent, and fast-forward to July, we saw an increase of almost 600 per cent representing a 1.89 per cent upswing.
“Non-metropolitan areas experienced the greatest rental increase with an average of 4.4 per cent, while metro areas took a downturn to negative 1.1 per cent.”
While those indications sound positive, it is likely that the pressures caused by this contributed to tightening competition between agencies in managing a shrinking number of properties.
“Price wars have been a common gripe for the industry during the past 18 months with most agencies not being able to compete,” Ms Anich said.
“Surveyed participants told us about two of their biggest internal issues being rent roll growth, and profitability issues.
“Nearly 45 per cent of all responses mentioned rent roll growth as a challenge faced by their agency but we know this is usually symptomatic of wider industry issues.
“Rent roll growth is both a direct by-product of Australia’s property investment portfolio and a complex chain of agency-level issues spanning marketing and business development activities, hiring the best team members, rent roll profitability, diversity of portfolio, efficiency in generating income, and the amount of time spent managing paperwork and systems,” Ms Anich said.
“Agencies need to determine which particular issue is affecting them most significantly and work towards resolving that in the first instance.”
The second major concern cited was profitability, with 22 per cent of property agencies saying it was a major pain point.
“Addressing profitability concerns doesn’t have to mean looking at revenue leakage, increasing commissions and fees or being pressured by price wars – productivity is often overlooked for its profitability-boosting capability,” Ms Anich said.
“Businesses can think about ways to reduce their administrative burden and in doing so increase their profitability, their ability to better serve clients, and demonstrating value in such that fees and commissions become a little part of the client conversation.
“Using tech solutions to help owners, landlords and customers to more easily access their property information, end of month statements, maintenance updates and inspection reports reduces downtime, calls and emails and equals profitability in the long run.”
