Renting in Canberra – The State of the Market
There are a lot of things we love about summer. The long days, the summer sun, after work drinks in the beer garden, picnics down by Lake Burley Griffin. It is the best time of year, unless of course you’re a tenant looking to move. And as anyone who’s been to an inspection lately knows, the competition is strong.
We sat down with Independent Property Group Managing Director of Property Management, Hannah Gill, to get a rental market update and some sage words of advice.
What’s the market like right now?
It’s tight. It’s really tight. For example across most of October we had an average of 250 people coming through exhibitions. Last weekend we had just shy of 400 groups through, so it’s picking up. Allhomes today has 1684 homes available across Canberra and Queanbeyan; in a comfortable market we usually sit around at least 2000.
From now until the end of February, it’s going to get busier and busier. There are more people looking because more people are coming to town, so we are starting to see a lot of enquiries from people who are based interstate – they’re moving to Canberra early next year and want to secure a property now.
Suddenly the market is flooded with enquiry but we don’t have a huge amount of stock, so I imagine it’s going to be a tight market for the next 3 or 4 months.
What’s causing it to be tighter than usual?
It gets tight because the New Year sees an influx of university students, defence personnel and public servants. There are lots of contractors coming into town, lots of postings happening, which is why we see the arrival not just of students, but of families.
Over the last few years around the busy time we’ve had consistent development stock settling, so in December or January we have had 50 or 60 more apartments on the market. This year we don’t really have any significant numbers settling and there are more and more live-in owners buying in developments, so there are less investment rental opportunities anyway.
In the past we would sign 45% a development for our listings as investment properties; right now it’s less than 30%, so it’s a big shift in numbers. At the end of last month we only had 11 apartments available, the rest were rented. So the turnover is pretty quick. Rentals aren’t staying on the market long.
Do you have any good news for tenants looking for a place?
The good news from a tenant’s perspective is that we haven’t seen a big shift in rents. What normally happens is that when the stock gets so low, we see rents start to go up quite quickly, whereas for the past few months our rents have held quite steady at the $417 a week mark, so that’s a benefit.
Another good thing at the moment is that property will be coming up for rent that won’t actually be available until the new year because tenants are giving longer vacate notice periods; they’ve secured something else or they know they’re leaving Canberra on a certain date.
Trying to balance the 21-day notice period that you need to give to your current landlord with finding and securing a new place can be tough. You don’t want to be paying double rent unnecessarily and you obviously want to have a new place lined up before your notice runs out. Keep a look out for properties currently advertised but not available until the New Year as this will help ease that pressure over the silly season!
What can prospective tenants do to help them get a place?
Ultimately there are two things that we take into consideration when someone applies for a property 1) they can afford it and 2) they can care for it.
When working out if an applicant can afford a property we use the rule of thumb that you shouldn’t spend more than roughly 30% of your income on rent. It’s the same figure they use to determine mortgage stress.
Caring for the property comes down to previous rental references or, if they don’t have that, character references.
That said, there are other things that you could do to improve your chances. Come really prepared for exhibitions because the turnover is quick. We might get 3, 4, 5 people apply for a property, so if you can prepare your documentation, prefill applications, and word up your references, that could make all the difference. What could be the difference between one tenant getting approved and the other one not is that we can get one’s rental references straight away and the owner will approve it. The other one might be a stronger application, but if we can’t confirm their details we can’t take it to the owner. So having easy access to references is a good thing to push an application through.
An article in news.com.au last week interviewed a girl who was asked to provide evidence of a year’s worth of rent in savings as part of the application, something like $10,000. What are your thoughts on that?
I don’t know about Sydney legislation, but we can’t do that here. We can only ask for a month’s rent in advance. A real estate agent shouldn’t be relying on a bank account to support an applicant’s financial situation; their payslips should be doing that. You could just put money in there from your parents and take it straight back out, really. It’s the ability to see that there’s an ongoing income or Centrelink payments that will support a claim that an applicant can afford a property. You might have ten grand, but you could spend that tomorrow. It’s more about the ongoing finances that are important for owner’s peace of mind.
Do people offer to pay more rent in a tight market, and does that have a big impact?
Yeah they do offer it, but that can happen at any time of the year. If they really love a property they’ll offer to pay more. Owners obviously like that, but we still encourage them to take the strongest application based on the criteria, not just snap up the extra $5 per week. Because if they can’t afford that then what’s the point?
Can you ask an applicant for more money than advertised?
Tenants can offer, but we can’t ask. If someone puts a higher offer in, we let tenants know that has happened and they can also do that, but we would never say, ‘well you’ll need to pay $5 more’.
Do you take all applications to the owner?
We don’t take applications if they can’t afford the property or if they’ve got terrible references. We let the owners know that we’ve got it, but explain why we’re not bringing it forward. So we do all the checks and we cull them down to make sure the criteria are met. And if an application hasn’t been approved for a reason that is obvious, such as we can’t get on to their references, we’ll let the applicant know that.
We always hold applications if they want to apply for other properties so they don’t need to keep filling them out.
What would you say to tenants who have pets looking for home?
At this time of year we have a lot of families coming to Canberra, and they often do have pets, which can make it hard for them to secure a property. If someone’s applying with pets we encourage them to include a pet reference from their vet and/or property manager, because then we can share that with the owner for their peace of mind. It’s hard situation, but just because a property doesn’t say pets considered, it’s still worth applying. If it’s a really strong application and the leasing consultant is doing their job properly, the owner will still be given it to consider.
What are your top recommendations for people moving at this time of year?
Know how much you can afford to pay if you do need to pay double rent for a week or two while you move and clean before you hand the property back over.
Chat to your property manager. Agents often shut down over Christmas, so if you want to move out, say 28th December, will you be able to arrange a final inspection?
Pre-plan things like removalists, carpet cleaning, etc. because a lot of businesses will shut down for a 2 or 3-week period. If you can’t hand the keys back because the carpets aren’t done, you do need to keep paying rent. So if you’re think you’re moving around that shut down time, think ahead so you don’t get stuck.
So there you have it, the current state of the rental market in Canberra. For everyone facing a Christmas season move, good luck.
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