Conflicting Factors Affecting The Property Market, Features That Landlords Should Consider & A Rather Demonic Stare
Another first Tuesday of the month and yet another interest rate rise with the cash rate now escalating to 2.85%.
It’s hard to believe that it was a mere 0.10% only months ago but we can thank our friend ‘inflation’ for this meteoric rise.
With the latest inflation figures at a 32 year high, the Reserve Bank has hinted that there’s more pain to come.
So, what’s happening in the property market?
The latest figures were released yesterday and alarmingly, Brisbane property prices dropped by a massive 2% in the month of October.
This figure might not seem that dramatic but keep in mind that at this rate, properties would lose a quarter of their value over a 12-month period.
It was interesting to note that Brisbane prices fell more than any other capital city in the month of October with Sydney (a loss of 1.3%) coming in at a very distant second.
From the perspective of an agent, we’re seeing a rather unusual trend occur that is bucking the trend of what we’d normally see at this time of the year.
The number of new properties to the market is surprisingly low and even less than the number of new listings we experienced at this time last year.
Keep in mind that last year, the number of new listings was lower than we’d seen for quite a number of years, and this was the driving factor behind the explosive growth we saw in the six-month period between September last year and March this year.
So, what will this mean for median prices in the coming months?
There’s certainly a lower number of buyers out there now compared to this time last year although our numbers have increased from what we were seeing 2-3 months ago.
Many agents are reporting that appraisal numbers are very low (this is a leading indicator of how many properties will be coming to the market within the next 30-90 days) so there’s every chance that property prices might not fall at the same rate that we’re seeing now.
Affordability and lending policy is fast becoming an issue so whilst we may have willing buyers in the market, their hands might be tied to a certain degree.
It all leads to a tighter market with less transactions and this affects real estate agents more than anyone else – more on this over the coming weeks.
Now back to our current topic of investing…. what are some of the aspects of a property that you might look for in an investment property and how do you protect your asset in the best way if your property does possess some of these features?
Let’s take a look at some of the aspects that are worth considering if you’re about to buy…
- Swimming Pools – There’s a theory amongst investors that you should never rent out a property that has a pool, but I don’t believe this to be true. Swimming pools are very popular in our hot climate, and you only need to search the online real estate portals to see that there’s very few rentals available with pools. Yes – there’s equipment that can be expensive to replace (such as filters, pumps etc) but our recommendation is to charge the tenant for the chemicals and have a local pool shop come in for monthly maintenance. As long as the pool is being maintained, we find that pools do not cause anywhere near as many problems as landlords might expect.
- Outdoor spa baths – Very similar to a swimming pool, a spa bath is a very rare commodity if you’re a tenant and spas remain very popular for those that have them. Many years ago, I rented a home with a spa bath and at the time, I probably didn’t realise what a luxurious and rare feature this was. For those that aren’t aware, a spa bath falls under the same legislative requirements and requires a pool safety certificate irrespective of any lockable cover that it might include. Again, if I owned a property with an outdoor spa, I’d have it serviced monthly and have the tenant pay for any chemicals that it might require.
- Sheds – There’s many people that are currently building a home and as such, need to rent a property in the interim. These families might be prepared to compromise their space over the short term but might have a lot of personal items that require somewhere to be stored. A shed can be a fantastic addition to any rental property and obviously requires almost no maintenance. In fact, there’s evidence to suggest that properties with a shed attract significantly more money (as a rental) than those without any additional storage options. Make sure the shed is Council approved because insurance companies will often refuse to pay out monies to anyone (tenants or landlords) if there’s damage to people or possessions if the shed isn’t Council approved. If it is, there’s every chance that an investment property with a shed will be very popular with willing tenants.
- Solar systems – With ever-increasing electricity prices, tenants are fast recognising the benefits of renting a home that has a decent sized solar system. Again, modern solar systems are generally low-maintenance and the best aspect of installing solar is that there’s often government incentives offered for doing so. If you’re a landlord, don’t underestimate the attraction of a solar system…particularly when weekly rentals are increasing, and tenants need to carefully consider the costs of everyday living if they need to pay the prices that it will take to secure a suitable property.
- Fencing – This might seem like an unusual statement but with the new tenancy laws in place (where a landlord has a very limited opportunity to refuse a tenant bringing a pet into their property), there’s now a solid reason why sufficient fencing can be both an advantage but also a disadvantage. Sure – many tenants have young children or pets (or both) so if you don’t have adequate fencing, you might be reducing the number of tenants that might be interested in renting your property. But in saying this, one of the few reasons that a landlord might have sufficient grounds to refuse a tenant’s pet is that the property has inadequate fencing and as such, it might be dangerous for the pet. This might seem like I’m favouring a landlord, but I have strong views about a landlords’ right to refuse a pet to live inside their home if they so desire. Many homeowners don’t allow dogs and pets inside when they live in their own homes so I can understand why they are apprehensive about a tenant that has pets with free reign to live inside their homes. It’s really important for any fencing to be structurally secure and completely effective and I’ve seen instances where tenants have attempted legal action against a landlord if a pet manages to escape due to fencing that couldn’t keep the pet securely inside a yard.
- Air-conditioning – We’re living in a hot climate and these days; more and more properties do offer some form of air-conditioning. Because of this, properties with no air-conditioning tend to stand out more and more. A split system air-conditioner generally won’t cost you an arm and a leg to install so there’s every chance that should you install one (or more), a tenant will often happily pay more for the convenience. Right now, is probably not the ideal time to install an air-conditioner (given we’re approaching Summer and the demand is high) but you’ll likely find a better deal and more availability of tradespeople to install one at a different time of the year (such as Autumn or Winter)
There are plenty of other items that I’d highly recommend installing if a property doesn’t have them (items such as dishwashers, security screens (or at the very least, fly screens), ceiling fans, garden sheds or certainly free-standing robes (in homes where at least three of the bedrooms don’t offer built-in robes.)
As a landlord, you might be thinking that you don’t need to worry about installing anything given the vastly limited number of rental properties currently available and the incredible rental demand but I can assure you that in every market, there are ‘swings and roundabouts’…and at some point in the future (it might be a while away but it will happen), we will see a time where tenants have plenty of choice and small items like air-conditioners, garden sheds, solar systems etc could be the difference between securing a tenant (or even a competitive situation where you might have many tenants competing for the same property) or having the property sit vacant for some time with a sizable loss of income.
It was only a few years ago where I saw a landlord receive an offer from a tenant to rent the property at the advertised rental amount on the provision that the landlord installs a split system air-conditioner in the master bedroom (because the tenant was a shift-worker that needed to sleep during the day).
The landlord refused and the tenant moved on and found somewhere else to live.
This property sat vacant for almost 4 months with a loss of income of more than $6000…and given the split system air-conditioner was priced at around $1700 fully installed (back at this time), it is fair to suggest that the landlord made a silly decision.
If you’re looking for any advice on your rental property, you’re welcome to let us know as we have one of the most experienced property management teams on the entire North side of Brisbane.
Until next week…Happy Renting and as usual, Happy Listing and Happy Selling.
Feature Property Of The Week
This week’s feature property is 15 Buranda Road, Clear Mountain – Beautifully nestled amongst the glorious leafy green canopy of the treetops, this is perfect for those looking for space, privacy and quite frankly a complete serene lifestyle. This home offers a custom split level design with striking timber hardwood floors throughout the living areas, 4 sizeable bedrooms all with built-in robes, a huge air-conditioned master bedroom with its own private deck, 2 lovely bathrooms and a handy powder room, a stunning kitchen with a solid timber bench tops, a separate office or mud room and a separate laundry with direct access outside. You will find a fabulous rear deck that overlooks the tall timbers and the forest beyond. There is a double lock up garage with plenty of storage behind, town water, a biocycle system and gas hot water. Located only minutes from the Eaton’s Hill Hotel and the heart of Albany Creek and just a tick over 30 minutes to the Brisbane CBD, this is a very liveable home that you can add value to as you go. Put this one on your priority list and make sure you get to the open home this Saturday to enjoy the serenity that this lovely home exudes.
Insights Article…
As Michael has discussed in today’s blog, the latest property data is in and Brisbane has taken a sharp turn in property prices. Here’s an article that showcases the position of the property market in every capital city in Australia. There’s some interesting aspects to this so well worth a read…
Click Here To Read Article
Did You Know?
Michael insists that one of the best places to take the kids at Halloween is the Caboolture Historical Society where the kids have plenty to do. Michael took a photo of his little kids here (Hunter and Harper) and despite asking them to smile, the looks on their faces (particularly Harper) seemed to be quite reminiscent of the macabre theme.
‘The Michael Spillane Team’ had their second best month of the year so far for sales with many of these results leaving our sellers with huge smiles on their faces. Despite the fact that interest rates are rapidly increasing, it is very possible to achieve a great price if you engage the right agent.
