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Desperate tenants in bidding wars - SMH 17 June 06

Discussion in 'Real Estate' started by NickM, 17th Jun, 2006.

  1. NickM

    NickM Co-founder Staff Member

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    "Desperate tenants in bidding wars
    Bellinda Kontominas
    SMH June 17, 2006
    SYDNEY'S rental market has become so competitive that desperate house hunters are being forced to bid against each other to secure a lease. Critics say those with more money benefit and the auctions are not transparent.
    At least one agent is setting price ranges for rental properties and leaving prospective tenants to compete in silent auctions.
    "We're letting the market dictate to us what the property is worth," said Toula Kavich, the marketing manager of Callagher Estate Agents at Annandale. "We started rent ranging because many of our tenants were missing out on properties as they lease so quickly." Ms Kavich said the system, begun in March, was fairer to tenants who could not take time off work for midweek inspections.
    The agency recommended tenants "make an offer in the high end of the price range" to secure a property, but said strict reference checks would still be carried out to ensure suitable tenants won the lease.
    The president of the Real Estate Institute of NSW, Cristine Castle, said competition for rental properties was tough across Sydney, with rental vacancy rates falling below 2 per cent.
    "It does ring alarm bells for us in this industry and it concerns us when it gets to this level because people need places to live."
    The problem was due to fewer investors and first home buyers entering the property market, and the squeeze could force renters to pay more than they could afford, she said.
    The highest demand for rental properties was in Sydney's inner suburbs, including Woollahra, Lane Cove and North Sydney, where vacancy rates fell to 1.7 per cent and median rents rose by $20 or 7 per cent last year, according to the latest NSW Housing Department figures.
    In the east, one in seven applicants offered above the asking price, said Laing and Simmons Double Bay. On the North Shore tenants paid up to $50 a week extra to secure the more sought-after properties and even more for beachside rentals in the lead-up to summer.
    "We had one property advertised at $400 a week and ended up getting $460 for it because people kept placing bids," said Bree Higgins, the property manager at Cunninghams Real Estate in Balgowlah.
    But Chris Martin, the policy officer at the NSW Tenants Union, said that while it was not illegal for bids to be made on rental properties, the practice may be against the industry's rules of conduct. "If you're a prospective tenant you're not in the position to know how many other people have applied or bid for the property, so you don't know whether the auction is legitimate or the agent is just trying to push the price up," he said.
    Jarrod Chapman and his partner, Helen Musgrave, recently moved into a rental unit after a six-week search in which they were gazumped twice. "If agents allow bidding on rental properties people with more money get the nicest place every time," Mr Chapman said.
    UP AND DOWN
    - Last year median rents across Sydney increased by $20 a week.
    - In January, vacancy rates fell to a five-year low of 1.7 per cent.
    - Sydney's median rent in the March quarter was $300, up 3.4 per cent from the December quarter. "
     
  2. Jacque

    Jacque Team InvestEd

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    Spooky Nick!! I was just about to post this myself!

    Interesting article but not at all surprising, from what I've been seeing in the field. Good quality rentals, well positioned, are experiencing decent rent rises for the first time in four years, in some areas. About time :D

    With the overinflated market of 03-04 which has now cooled, tax changes which hurt investors big time and turning sentiment, it was a foregone conclusion that this would now happen.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Sounds like the market when I first moved to Sydney in 1999 ... the rental market in Artarmon was so tight that you literally started filling in the application form as you looked at the unit - the PMs would only consider the first 4 or 5 applications submitted ... and they were usually submitted within minutes of the inspection beginning.

    Contrast to that a few years ago when the market was so weak that landlords were offering up to 6 weeks free rent, and even free holidays for tenants !!!

    All just part of the cycle.