Landlords need to take an aggressive approach to pricing with the latest figures produced by CoreLogic RP Data showing that rents in the national capital cities are increasing at their lowest rate on record according to Shane Kempton, CEO of Professionals Property Group.
Mr Kempton said that during May 2015, weekly rents in the combined capital cities grew by only 0.01%.
“Perth and Darwin have been the hardest hit by the current weak rental market with rents falling by 0.5% and 0.8% respectively in these cities during last month.
“Both Perth and Darwin also recorded the biggest falls in residential rents of all the capital cities falling by 4.5% and 5.5% respectively.
“In contrast, rents in Sydney jumped by 3.1% over the past year which combined with surging property prices has made it the hot spot for property investment in Australia.
“Landlords in soft rental markets such as Perth and Darwin therefore need to carefully focus on the pricing when leasing their property in the current market.
“For example, in Perth there are now more than 7,000 properties for lease and tenants have a large number of potential rental properties to choose from.
“In particular, Professionals are finding that average rental properties in Perth with a weekly rent of around $500 are now difficult to lease if they are even over priced by $10 such is the sensitivity of tenants towards pricing.
“Landlords who are most prone to overpricing are property owners with recently vacated homes who have had tenants continuously in their property for an extended period of time and last leased out their property when there was a shortage of rental properties and rents were very high.
“These landlords will be conditioned to receiving high rents and if they do their research, they will be very surprised how much rents have fallen in some areas of Perth.
“It is critical that landlords set their initial rental price correctly because they will get the greatest interest in the property when it is initially promoted on the market.
“Overpriced properties will be ignored by renters and landlords may find that after several weeks they still can’t find a tenant and as a result they have lost thousands of dollars in potential rent.
“It is better to be smart than sorry by initially cutting the rent to meet the market rather than having an empty property that is generating no income with the landlord still having to pay outgoings such as strata fees etc.,” he said.