Vacancy rates could be set to rise in certain property types, so property managers need to know what tenants will be looking for.
An oversupply of off-the-plan developments in capital cities should be a concern for property managers and investors, as it could cause vacancy rates to rise in older apartment buildings, CoreLogic has warned.
Tim Lawless, CoreLogic’s head of research, has said in a recent interview with The Adviser that while capital cities are the most at risk, Sydney seems to be the least affected by the oversupply.
“Sydney looks pretty safe. All the metrics we follow show that Sydney’s supply levels are very high but they’re not oversupplied.”
The same could not be said for other capitals, with Brisbane, Melbourne and Perth the worst affected by the boom in off the plan developments.
“Unit markets well and truly have reached new historic highs for the amount of supply that’s been approved and is now under construction.” he said.
Mr Lawless said that this growing number of new apartments could “see renters fleeing to quality” which would cause vacancy rates to rise in older apartments.
Separating your investment from the crowd is the key to avoiding vacancy in this market Mr Lawless said.
“The projects which are more protected tend to be those that are somewhat differentiated, whether through location, if they’re closer to rental hubs, to amenities or public transport and so forth.”
This comes after a report released by CoreLogic earlier this year stated that rental rates were decreasing due to an oversupply of properties.
Cameron Kusher, a research analyst for CoreLogic, warned that this was expected to continue throughout the year and could affect more than just off the plan apartment developments.
“Potentially, the changing rental market conditions will have a flow on effect for older stock, particularly units given we’re seeing so much new unit supply being added to the rental market, much of which is located in inner city locations.” Mr Kusher said.