- Posted By Jasmine Adams
We are pleased to report the Broome market is starting to pick up some pace. Rental vacancies have fallen with in excess of 130 properties being leased by our Agency since the beginning of this year and this represents an increase of 30% of properties leased by First National Broome. This is a vast turnaround from 2016 when approx. 100 properties were leased for the same 4 month period.
First National Broome monitors our vacancy rate constantly and are very pleased to report that it has dropped from 7 percent to 3 per cent since the beginning of 2017. We also monitor the average number of days a property is on the rental market which has dropped from 65 days for the Jan – March quarter to now an average 51 days on market in April.
Vacancies are headed in the right direction, which is a good sign but Owners should never become complacent about pricing and presentation. There is still 141 properties currently being advertised (76 houses and 65 units at the time of writing). Some of these are “under application” waiting for the lease to be executed, so it is still a competitive market. Now is not the time to get too excited and suddenly start increasing the rents as when you are advertising your property to attract the most ideal tenants, setting the correct price for your property is paramount. When you set your rental price, try not to think about what you want, but what your target market is willing to pay. Most tenants are still trying to negotiate rent downwards and this will not change until there is competition and limited choice.
Most importantly is to consider the term of the lease. In the past year we have seen more variation in the term of leases and this is based upon employment secondment. The majority of Australian renters are on fixed short-term leases of six or 12 months with a small percentage on periodic tenancies which means they can give 30 days’ notice, however if an owner is considering selling a periodic tenancy may be advantageous to all. So just how long should you lock a tenant in for when renting out your investment property? The answer is... it all depends on your circumstances so it is best to determine what's best for you. Our advice is to evaluate the level of demand prior to determining the length of the lease as this affects the rental price you can achieve and the period your property many be vacant.
Demand for rental accommodation spikes usually in January, March and April. As a general rule of thumb, if demand for rental accommodation is likely to be strong for the foreseeable future then there is less value in trying to lock tenants in on really long lease terms. The question in these uncertain economic times is whether or not this will continue and we certainly hope so.