Echo Property Magazine #1

Landlords, investments, rates and rents

S Haslam

Interest rates are nearing their peak, according to the big four banks, and on the most optimistic (CBA) estimates will fall from March to be 1% lower by the end of 2024. While market conditions mean the recent rapid annual price rises have tapered off, factors such as a return of immigration, and high employment rates have led to a situation where demand for housing is strong and supply problematic, to the extent that many are calling on governments to make sure we build more houses, especially cheap ones.

Despite recent higher rates, according to the ABS head of finance statistics on 3 July 2023, the value of new owner-occupier dwelling loans commitments rose 4.2% in May (total new loans rose 4.8%) and the number of new owner/occupier loans rose 5.1%, after a long steep decline in new (as opposed to refinanced) loans in the period January 2022 to January 2023. This may indicate those with the money are now taking advantage of the lull in price rises.

But despite some Northern Rivers agents reporting strong sales in recent months, and some vendors holding out for higher prices, now is a time when many people around the country are tightening their belts and are worried about their finances.

According to a survey published in the SMH,*[1] 51% of respondents said they would struggle to afford a major expense of a few thousand dollars, a figure 10% higher than five months ago. Not only low income (64%) but also middle income (49%) and high income (46%) people are feeling the pinch, and just 5% believe the economy will improve in the next month (47% believe it will get worse). It’s hardly surprising that many families are trying to find extra ways to earn income.

Because Australia’s landlords are overwhelmingly ‘mum and dad’ investors (71% of Australia’s landlords own just one property, 90% own one or

two) they tend to want to increase rents urgently when interest rate rises mean it’s a struggle to pay the mortgage on their house and rental property. One other option is to sell your investment property, taking advantage of the recent price rises. In March 2023, 59.7% of properties for sale in the City of Sydney were investment properties (the ten-year average is 38.6%).*[2]. However selling isn’t always a good option if you’re over-extended; 10% of sales in the March quarter in Sydney were loss-making sales.*[3] Kicking out tenants at the end of a fixed-term tenancy in order to rent to someone else at a higher price is known as a ‘no-grounds’ eviction, and concern for the tenants involved is leading to pressure to ban this practice in NSW, as has happened in the ACT.

Australia is one of the few countries that allows no grounds evictions, and the demand for urgent rent rises may not be as strong if Australia’s rental market was dominated by landlords with huge numbers of properties, allowing rent increases to happen more naturally as tenants move on. One factor influencing the large number of small landlords is Australia’s superannuation rules allowing people to invest their own self-managed super in property.

Whilst it’s common to hear of ‘greedy landlords’ kicking out tenants and increasing rents, there is

something of a myth that we’re overrun with tophat wearing landlords from the Monopoly board; the third-most-common landlord occupation is registered nurse – almost as many nurses are landlords as CEOs/managing directors. The fourth landlord occupation is accountants, followed by admin assistant/office worker, office manager, advertising/sales manager, high school teacher, infant/primary school teacher and so on. Only 40,000 people owned five or more properties in 2021, out of 2.2 million landlords.*[4]

Soaring prices over the last 20 years have led more people to invest in property. Record low interest rates have encouraged people to borrow to invest and over-extend themselves, leading now to lossmaking sales and rent rises. The number of people with just one rental property has risen 81% in that time, supercharging the market, but since 2019 the total number of landlords has started declining. Despite record rents, interest rate rises can make it uneconomical to hold an investment, and discussion of rent freezes, abolition of negativegearing and bans on no-grounds evictions have also discouraged some landlords.

The one group who’s the clearest loser in all of this is young people. Whilst many landlords have families, the number of young landlords has declined, although the number aged 60 and over has continued to increase, due to the fact that property price increases have overwhelmingly benefited those who bought property over 20 years ago. Meanwhile, most young people are struggling to pay high rents and save a deposit for their own home, let alone an investment property.

*Sources: 1. Shane Wright: SMH 18 July 2023 ‘Half of Australians on financial brink as living costs bite’.

2. CoreLogic, April 2023. 3. CoreLogic, 28 June 2023 ‘Short term selling on the rise as property profits fall’. 4. ATO dataset 2020–21 table 14a.

First National Byron awarded agency of the year, again

First National Byron

For over 30 years, First National Byron has cemented its position as the region’s number one agency, servicing a footprint that extends across the entire area. We are proud to be recognised as an iconic local company employing the most highly trained and accomplished sales, marketing, photography, and administration staff. At First National Byron we utilise the latest technologies to curate successful marketing campaigns. We have built a digital community over the past 15 years of thousands of the property owners in our service area, as well as tens of thousands of real buyers from all over the world who have enquired or inspected any of our properties for sale over these years. It is through our database community that we can effectively market directly to those buyers who are already in love with our region and already educated on buying in this area – they are just waiting for the right property to become available. Our ability to reach the right buyers is unparalleled. Over 37,000 registered people now receive our weekly newsletter containing upcoming properties for sale, current properties for sale, open homes for the week and always some local news.

For the seventh consecutive year, our team has won the RateMyAgent 2023 Agency of the Year for Byron Bay. Our award-winning sales agents consistently rank in the top 10 of the entire First National Network, while our office has been ranked Number 1 for the last five years.

We know our patch, love our people, embrace our lifestyle, and are actively involved in a wide range of community events and initiatives that shape our region. We love this community, and we love what we do.

Atlas Byron Bay, the premier luxury agency renowned for its unparalleled expertise in the high-end real estate market, proudly announces a game changing collaboration between two of its most accomplished professionals.

Jeremy Lewis, an esteemed Partner at Atlas Byron Bay, has built an unrivalled reputation as a leading authority in the luxury property market. Known for his strategic vision, unwavering commitment to enhancing the client experience and exceptional negotiation skills, Jeremy expertly navigates intricate transactions with finesse, leaving an indelible mark on the industry.

JEREMY LEWIS AND HELENE ADAMS JOIN FORCES AS LUXURY AGENCY’S POWERHOUSE DUO

in the luxury real estate sector. With a deep understanding of the local market, Helene’s long standing list of satisfied, repeat clients bears testament to her reputation for successfully managing high-profile transactions for exclusive clientele. Together, they form an unparalleled powerhouse duo, combining their vast knowledge, exceptional skills and unwavering passion for delivering bespoke client experiences.

“Jeremy and Helene embody the essence of Atlas Byron Bay” says Michael Coombs, founding Director of Atlas Byron Bay. “Their exceptional talents, unwavering dedication and shared commitment to excellence perfectly align with our core values, further cementing our position as the leading luxury agency in the region.”

Helene Adams, an experienced Agent at Atlas Byron Bay, is a consummate professional with an unparalleled track record

Jeremy Lewis 0422 617 003 jeremy.lewis@atlas.com.au

Helene Adams 0412 139 807 helene.adams@atlas.com.au

2/1 Marvell Street, Byron Bay atlas.com.au

Magazine

Echo Property Magazine is a brand new monthly magazine, which will be inserted and distributed with all 24,500 copies of The Echo, on the first Wednesday of each month.

Echo Property offers the best value and most effective reach for property advertisers in the region. Spanning the Byron, Ballina, Lismore and Tweed shires, The Echo offers the largest circulation by far.

Advertising properties for sale across the Northern Rivers, Echo Property Magazine will be a go-to real estate guide for readers each month. It will also feature on The Echo’s highly trafficked website www.echo.net.au as a digital magazine which will include hyperlinks to your website. The Echo online averages 137,500 unique visitors monthly!

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Special intro offers still available on second issue!

Vicki gave useful info on preparing property for sale with attention to detail and design. She dealt well with inquiries and showing people over the house and walking with them on tracks through our rainforest. She communicated well with clients and solicitors during sale process, problem solving a couple of issues with creativity and good communication skills. It was a delight to work with such a friendly and skilled agent. - Rhonda (Vendor)

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To chat further please contact: enquiries@honeybeehomes.com.au or 02 8088 0773 www.honeybeehomes.com.au