There’s an old adage in real estate that rent money is dead money. Given the choice between home ownership or living a tenant’s life, most property buyers used to opt for the former. But this sentiment is shifting, especially in Melbourne and Sydney, writes Nic Cuni of EST8 Agency.
As we’re seeing with The Evermore development, investors are re-entering the market, banking on the lack of affordability in the Australian housing market as a sure bet that future tenants will be champing at the bit to take up new property stock for lease.
Recent property data suggests that renting might be the superior investment strategy in a market where rents are rising faster than income.
And as the most liveable city in the world six times running, Melbourne is fast shaping up to the city with the most attractive propositions for buying to rent. We have all the major banks here, and our universities are ranked among the best in the world.
Trends show that people are moving from Sydney to Melbourne for more affordable property. In terms of migration patterns overall, we’ve doubled the average migration with more than 120,000 people coming every year.
Rental vacancies in Melbourne are at an all-time low: compare the current vacancy rate, which is at about 2.5 per cent, to about 3 to 4 per cent five years ago.
The proportion of new affordable rentals has also shrunk from 20.7 per cent to 17.8 per cent in the past five years.
And other factors are at play that, if they come to pass, would ensure Victoria will be the market to turn to for attractive, luxurious long-term rentals.
A state government review of Victoria’s Residential Tenancies Act could see possible changes that would allow tenants to have long-term leases of more than five years, and greater protection such as banning rental bids, restricting rent rises to once a year and banning no-pet clauses.
All these inducements and savings add up to renting as an appealing proposition, especially as tenants can free up their finances to enjoy the lifestyle and amenities that modern apartment developments are offering.
At Evermore in South Melbourne, our luxury development by Landence Group, there’s an overarching demand by investors who are purchasing to rent.
Locals are keen to be close to Wesley College and Melbourne Grammar; it’s close to everything but not in the CBD, so it offers the best of inner urban postcodes from Melbourne’s acclaimed arts centre precinct to all the garden and suburban delights of South Melbourne. The South Melbourne market is a Melbourne icon.
The station will see thousands of people along St Kilda Road gaining easy access to the surrounding parks and the CBD.
Rents are also going up considerably each year, with $10 to $30 a week increases not uncommon in sought-after locations.
Due to price and proximity, the Evermore is a great example of why more and more purchasers are making smart investment decisions by buying to rent.