In our June newsletter we called the likely bottom of the property sales market as follows:

….for all of these reasons, we expect an improvement in market activity and prices to gradually flow through to the mechanics of the lending system and the market over the rest of this year into likely moderate gains in 2020.

The June market numbers bear this out showing Sydney and Melbourne property prices rising for the first time since 2017 with increases for the month of 0.1% and 0.2% respectively.

During the month with this change in market sentiment in mind, we advised a client who had contracted to sell a property in Brunswick subject to finance to take a risk by declining the buyers request to extend the time available to secure finance and put the property back on the market. We had maintained the marketing of the property while it was under offer and moved quickly to secure an unconditional offer at a price $20,000 higher than the original contract price for our (very happy) client.

So what is our next call?

We see good news for landlords on rental levels during 2020. We think this will occur because:

  1. The underlying driver of housing demand – population growth – continues to exceed 100,000 per annum in Melbourne.
  2. The vacancy rate for rental property remains relatively low – it fell to 2.2% in May.
  3. The rate of addition of new stock is declining as the pipeline under construction is completed and fewer building starts are underway as a consequence of the increased difficulty developers have had in financing developments. The charts below from the Australian Bureau of Statistics make this abundantly clear.

The combination of these factors is likely, in our view, to lead to significantly higher rates or rental price growth flowing through the market in 2020 – good news for Landlords.