Why the Residential Rental Market in Victoria is So Competitive

The residential rental market in Victoria is currently facing unprecedented low vacancy rates and increased rental prices. The low vacancy rates have led to increased competition among renters, driving rent prices up, as potential renters offer above market rates to secure their preferred home. Vacancy rates refer to the number of available rental properties in an area. Low vacancy means that there are very few available rental properties compared to the total number of renters looking for a property in that area. When there is a high demand for rental properties but limited availability, vacancy rates can quickly become extremely low. Vacancy rates are often major factor in driving up rent prices, as it creates an environment where rental providers can charge more for their properties or potential renters may attempt to offer more to secure their next home. The recent increases to the RBA cash rate has caused the intended flow on effect to mortgage interest rates, an environment that can and has motivated some more cautious investors to sell off their investment properties, avoiding the increased mortgage repayments. This can reduce the size of the rental market as existing rental properties are sold to buyers who want to live in them, and less new rental properties enter the market as investors bide their time to their next purchase. As the demand for rental properties increases in the face of this limited supply, rental providers have the opportunity to negotiate the rent and terms of the lease with increased power. This can lead to longer-term leases with renters willing to lock into longer rental periods in the face of the difficulty they have had to secure this tenancy. The increased competition amongst renters in Victoria has also provided rental providers an increased pool of applicants for their properties. This allows rental providers to be more selective when deciding on who best to rent out their investment to. As a rental provider, or even a potential renter looking to participate in this dynamic rental market, understanding how low vacancy rates are influencing rent prices is essential. If you're a rental provider looking to take ensure that your property is poised to make the most of this current market, contact The Property Mentors for a no-obligation free appraisal. Let our team show you how our boutique property management service can set your portfolio up for future success.