Landlord Articles

Rents for prestige property tumble

Bridget Carter | May 18, 2009 - Article from: The Australian

THE number of properties being put up for rent in the nation's wealthiest suburbs has soared, as unemployment fears intensify and struggling mansion owners try to avoid selling during the recession

Agents in prestige suburbs say an oversupply of properties for lease has caused rents to fall by at least 25 per cent and forced landlords to wait longer before securing a tenant. The prestige rental market is also suffering because of the sharp downturn in the corporate sector, with fewer executives relocating and less generous rental allowances for those who do.

But the glut of top-end rentals is proving a bonanza for cashed-up tenants who can now live at a desirable address, often in a bigger and better property, and negotiate with agents over the rent. Lena Lahood, leasing executive at Ray White in Sydney's Double Bay, said the number of properties for rent during recent months in the harbourside suburb had risen by 25 per cent, many of them the homes of families trying not to lose face by having to sell. "There are a lot who are trying to keep their home and are saying 'take my executive property, rent it out'," she said. "They are renting cheaper so they can move back when the doom and gloom is all over." The situation is not exclusive to Sydney. Margo Rush, property manager at the Gold Coast real estate company Location Location, said top-end properties on the Gold Coast that fetched $1100 a week in the boom years could now be rented for $850. "We have a lot of properties where the owner built it or purchased it because they thought they would sell at a profit," she said. "Now that they can't sell it, they think they will rent it." Ms Rush said the market conditions were extremely favourable to tenants. "People are aware they don't have to pay the same price any more and are trying to negotiate the rent down with the owner," she said. Ms Rush said some landlords held out, until the reality set in that they would not get a better offer. Sydney finance industry professional Nick Marshall and three of his friends have used the rental market conditions to upgrade to one of the country's best streets - Ocean Street in Woollahra. He said that in recent years families would have been given first preference to rent the property he now calls home. But when he moved in three months ago, his application was one of just two and he negotiated $100 off the original rent, bringing it down to $1100 a week. Previously, Mr Marshall lived in a three-bedroom house in Paddington, and even though the Woollahra property is far more upmarket, he pays the same rate for his room - $290 a week. "It is a lot bigger and there is more space in terms of living area," he said. "And now we are in Woollahra, not Paddington." John O'Neil, rental manager at Raine and Horne in Fremantle, Western Australia, reported the same fall in prestige property rents because of a dramatic oversupply. He said the number of rentals available in his area had increased by as much as 300 per cent. "People speculated when times were good, and were having their houses renovated with the idea of making a profit," Mr O'Neil said. "But the market is not supporting that, so they are putting them up for rent." Jason Anderson, senior manager at property research firm BIS Shrapnel, said he suspected that part of the problem was that large corporations were cutting packages that included rental allowances for top executives. "The premium end of the market has a strong relationship with the profitability of corporations," he said. Nikki Hamilton, of Farquharsons Executive Rentals, which operates in Sydney's eastern suburbs, cites the example of a property, originally on the market for $5000 a week, having $2000 knocked off the asking rate. "I have never known it to be as diabolical as this in all my time in leasing," she said. "Owners will take what they can get. Everybody has pulled their head in again and the bonuses aren't being paid."

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