Renters set to benefit next year as landlords told to cut prices
Next year is set to be a good one for tenants, with the head of one of Sydney’s largest real estate groups issuing a warning to landlords to be careful of some changing market forces.
Renters will be among the biggest winners from the sluggish real estate market next year, with landlords set to struggle, according to the head of one of Sydney’s largest real estate groups.
Starr Partners chief executive Douglas Driscoll said tenants could expect a good year, with housing supply up — particularly for units.
“Apartment development has been high over the last three to five years and half these properties were snapped up by investors,” he said.
“Renters have more choice … landlords need to be ultra-realistic with the prices they set.”
Data from SQM Research showed 3.2 per cent of all rental properties in Sydney were vacant over November, a high proportion by historical standards.
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SQM managing director Louis Christopher said Sydney was becoming a renters’ market.
“The rise in vacancy rates across cities is expected in November as the year winds up … but we are also seeing an emerging oversupply of rental accommodation,” Mr Christopher said.
“Bargaining power (is) moving to tenants as some landlords struggle to fill their rental properties.”
Renters’ improved stand won’t be the only market shift over 2019, according to Mr Driscoll.
The Starr Patners CEO said several political and economic factors would impact housing and buyers and sellers should expect a different market to the one in 2018.
One of the biggest influences on the market would be the impending NSW and federal election, he said.
“If history teaches us anything, it is that when it comes to elections, people tend to sit on their hands,” Mr Driscoll said.
“Uncertainty about changes in policy, such as Labor’s proposal to limit negative gearing tax breaks to new investments and halve the capital gains tax, will cause an extended period of stagnation.”
First home buyers could expect a good year ahead because of the continued absence of investors in the market due to their struggles obtaining financing, according to Mr Driscoll.
The only change to this landscape would come if the NSW government removed current stamp duty concessions for first-time buyers, he said.
This included the exemption on duties for home purchases under $600,000 and discounts for those under $800,000.
Another issue for all buyers would be finance. Banks may become more prudent and low-ball buyers on valuations, limiting their borrowing capacity, Mr Driscoll said.
“We are already seeing many off-the-plan apartments that were bought 12-18 months ago now worth five to 10 per cent less than the original purchase price.
“Anyone who is struggling to secure lending should contest the valuation. It is possible to request a second opinion, or alternatively, provide extensive comparative evidence for similar sold properties.”
Mr Driscoll added that he doubted interest rates would be raised during the first half of 2019, but said it was likely they would change at some point and mortgagees should take advantage.
“It is advisable they pay down as much debt as they can while we have this advantageous environment.
“Paying an additional $150 a month on a $600,000 loan could save a homeowner more than $10,000 — and they will pay their debt down a year faster.”
Originally published as Renters set to benefit next year as landlords told to cut prices