Tenants set the price as owners push panic button

THERE’S a fight brewing among real estate agents as Gladstone rents continue to plunge.

Picture: Paul Braven GLARENTAL

THERE'S a fight brewing among real estate agents as Gladstone rents continue to plunge.

The high vacancy rate has given tenants the upper hand as owners and investors struggle to make enough to pay their mortgages and rates.

Renters are taking advantage of the opportunity - challenging real estate companies to drop their rent to equal what they've seen on signs out the front of vacant properties in their street.

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It's a logical move for renters, but one that will put them on the street if they don't win a discount.

But a rising number of homes are being taken by banks and in the past few weeks one real estate agent has been forced to evict tenants on two occasions because the house has been repossessed.

In a year, the average price of a rental house has dropped from a minimum of $320 to as low as $150.

A brand new home that would have been rented for at least $450 a week in November 2014, is now about $320.

If there's one thing agents do agree on, it's that the sliding rents are the result of simple supply and demand.

However, there's concern that some agents and owners are letting rents drop too low, and in turn devaluing the entire property market - causing long-term damage and turning investors off buying.

CBS Property Group owner Jim Baron and Elders Rental Department Manager Nikki Nation agree - the "ridiculous" rental prices need to stop.

"Owners need to stop panicking and lowering the rent," Ms Nation, who has been working in the Gladstone property market for 10 years, said.

"If agents stop putting out these ridiculous rents then the price will stabilise.

"Owners are panicking because their property is vacant … but the low rents are dragging the rest of the market down too.

"It's easy to come down, but much harder to come up. When the vacancy rate does drop and prices start to increase again, they won't rise anywhere near as rapidly as they've come down."

The vacancy rate is sitting at about 7.1%, up from 5.2% in July, which represents 985 vacant homes across the 4680 postcode.

About 850 of those homes are in Gladstone, Boyne Tannum and Calliope and that figure hasn't changed much in four months - yet the rental prices are still dropping.

CBS Group's Mr Baron, which manages about 400 rental properties, said real estate agents were knocking prices down below what's reasonable and doing their owners a disservice.

"Investors are obviously losing big time," Mr Baron, who has seen multiple homes repossessed in the past few months, said.

"Over the last couple of months some agencies have been putting prices down ridiculously and it's undervaluing our market.

"Owners are stressed and they've been ringing around - they're telling us all they've been told by some agents is to just keep dropping the rent.

"This is the time people should be buying in Gladstone but investors are looking at rental prices and saying 'why would I buy there?'

"Gladstone is a working town and instead of dropping prices, agents should be out making the effort to show properties when people want to see them - after 7pm."

Principal of Ray White, which manages about 1000 properties, Andrew Allen said the lowest his agency could go was $190 for an older style house, but six months ago that would have been $250.

"For some people there is a floor to what they are prepared to accept," Mr Allen said.

"For us it's definitely not a case of take a tenant at any price. People still have mortgage repayments to make.

"Most people are realistic - the attitude of most owners is that it's better to have a tenant (at reduced rent) than no tenant at all."

During October LJ Hooker, which has the biggest rent roll in Central Queensland, although they wouldn't give us a number, had their second biggest month ever moving new occupants into homes.

Principal Mark Spearing wouldn't give us that figure either but said his agency wasn't "having a major problem with properties sitting empty".

Mr Spearing agrees with Ray White's Andrew Allen that $300 is an average price for a house at the moment and the cheapest they have on file is $190.

"We're ensuring we are communicating with our clients and pricing property in line with today's rent.

"Obviously the market is weak, but I wouldn't say it's a slash-and-burn situation."

Follow this reporter on Twitter @helenspelitis

Originally published as Tenants set the price as owners push panic button