Owning a home has long been known as the ‘Great Aussie Dream’ while renting was typically viewed as a temporary phase between moving out of your childhood home and stepping on the property ladder. However, times are changing, and so are attitudes. Equal parts fuelled by economic pressure and a shift in priorities in the wake of COVID, we’re seeing a huge rental renaissance, and with that comes pressure on supply. Here we’ll look at the main factors driving increased demand for rental properties and share seven tips for navigating the competitive rental market to sign your next lease agreement with less stress!
What’s driving the appeal of renting over buying?
In some European countries like Switzerland and Germany, less than half of the population are homeowners, and renting is considered the norm – could we be heading in the same direction? Here are the key factors driving an increase in renting a home over buying:
- Affordability
Rising property prices (particularly in urban areas) make homeownership inaccessible to many, particularly younger generations. Property prices are outpacing wage growth, and the cost of living is rising. Despite an increased focus on budgeting and saving from Gen Z’ers, renting is often the only feasible financial option.
- Attitude shifts
While we’re still a way off becoming happy eternal renters like some of our European counterparts, attitudes towards renting have changed in Australia. It no longer carries a social stigma, with many viewing it as a smart financial and lifestyle choice. Millennials and Gen Z, in particular, often see renting as a tool to enable flexibility and mobility, to move freely for job opportunities or lifestyle changes without the burden of homeownership.
- Priorities reset
According to the Australian Bureau of Statistics, household spending on recreation, culture, food, and transport has increased. This indicates that greater value is placed on short-term experiences over long-term investments, particularly among the younger generations and those who reassessed their priorities post-COVID. This has led many millennials and Gen Z’ers to value creating memories and social connections over being weighed down by property debt. - Changing investment strategies
Property has often been viewed as an investment ‘as safe as houses’, but many young Aussies are now looking towards other investment strategies, like shares and high-interest savings accounts. This shift reflects a broader trend towards diversifying investments and avoiding the perceived risks associated with property investments.
Searching for your next rental? Here’s how to get the upper hand
A shift to landlords favouring more lucrative short-term accommodation offerings and increased demand is depleting our long-term rental stocks, leading to low vacancy rates and rising rents. All of this paints a picture of a rental crisis unfolding. And when you’re in the market for a rental property to call home, this makes things ultra-competitive. Here’s how you can get the upper hand:
1. Look further afield
Cast your net a little wider than the hottest properties in the most central locations to find pockets of lower demand and greater affordability. It also pays to get creative when uncovering opportunities – try things like word of mouth, community pages on social media, and building relationships with local real estate agents and property managers. Be sure to contact your local First National Real Estate property manager for access to listings before they get advertised and for help negotiating rental terms.
2. Act quickly
The goal of a good property manager is to find a suitable tenant as quickly as possible for the landlord. If you act on a listing by getting in touch as soon as it pops up, are ready to inspect at their convenience and are negotiable on the move-in date and term, you’re streamlining the process for the property manager and will often be prioritised.
3. Consider paying more
Property managers are not allowed to suggest this to you as it is controversial in the current climate, however, offering slightly more than the asking rent could save you a headache in the long run. If you can afford it, this tactic is guaranteed to make you stand out from other applicants, and if you can’t afford to pay more, look at different ways you can incentivise your application, like increased upfront payments or a higher security deposit.
4. Be ready to strike
Have all your documentation ready, including a completed rental application with references, proof of income, a credit report and identification. If you have a limited rental or credit history, be armed with a co-signer as reassurance. Chasing up documentation can be a huge time waster for a property manager, so making their job easy will position you favourably.
5. Look and act the part
First impressions can make all the difference when several suitable applicants are queuing up for a property. Be polite, professional, and punctual for viewings. Dress well and steer the conversation towards your great rental history, stable employment, and reliability with payments. This will ensure you leave a positive, lasting impression on the property manager.
6. Be proactive and persistent
After viewing a property, don’t sit back and wait for the property manager to contact you. Let them know you’re interested in the property, ask if they need any further details, and add a quick thank-you note. In a competitive rental market, don’t neglect the follow-up.
7. Consider alternatives
If you’re struggling to find your dream rental, consider other avenues, like sharing a house or apartment (which can make it more affordable), considering shorter-term leases in the interim, or subletting. All these will open you up to more options in a tight market and can tide you over until the tide turns.
If renting makes sense for you, be prepared
Renting is becoming an increasingly popular choice for many Australians, and thanks to the financial flexibility and lifestyle benefits on offer, it’s easy to understand why. However, due to this increased demand for rentals, navigating the market requires preparation, flexibility, and, for best results, a bit of networking. If you’re looking for your next rental or interested in bucking the trend and buying a property, contact your local First National Real Estate office today.
DISCLAIMER
The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial, or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial, or real estate decisions. Click here for full Terms of Use.