The rental market is seasonal with big variations in activity throughout the year. We are seeing a successful kick-off to summer.
Whilst there have been some reports suggesting that vacancy rates are increasing across Melbourne, the portfolio of the many thousands of apartments managed by MICM Property indicate a vacancy rate of less than 3% which is the industry accepted standard of a balanced market. This not only indicates the strength of the Southbank and inner city apartment market but also reflects the characteristics of the tenants of the inner city area. They are in the higher socio economic brackets. The inner city resident usually has a higher disposable income due to education levels and the smaller household groups.
This strong demand is reflected in MICM Property’s new leases. “We averaged over 50 new leases a week for January with February showing signs of being even busier still”. Says MICM Property Director Keith Bayliss.
MICM Property’s vacancy rate throughout 2011 has been significantly lower than the general Melbourne vacancy rates. This demonstrates the strength of the inner city apartment market which operates as a different sector to the general market in Melbourne.
According to the ANZ Bank’s December 2011 Australian Property Outlook, with five years of under-building relative to our population growth, we are now looking at a shortage of housing in most capital cities in Australia including Melbourne. To counter that, the report notes that rising rents will be the key to recovery: “the physical housing shortage is clearly reflected in rental markets where vacancies have been driven well below long-term averages, placing upward pressure on rents”.
“With rental vacancies already at or near record lows in most capital cities, we continue to expect a strong acceleration of rents in certain parts of the market”. The ANZ report also highlights that dwelling approvals falling sharply in 2011 combined with the overseas arrivals rebounding, the demand and supply equation is tightening.
These improved rental yields look set to attract investors back into the residential property market in 2012.