This is the time of the year when I reflect on the year that was. For nearly everyone, 2020 will be a year that will never be forgotten.
For us, 2020 had its highs, low’s and normality somewhere in between. It’s been hard to watch the hardship across the nation, the health outcomes, the many job losses, businesses unable to continue, personal dreams dashed or delayed and the overall devastating effect that COVID-19 has had across the world.
In Melbourne, my father passed away in October. He spent about 2 months in hospital, respite and palliative care, with no family members able to visit him. Sadly, very few could attend his funeral. Thankfully, I travelled to see him before he left us and the five weeks I spent with my mother, family and friends was actually the highlight of my year.
Rentals. There was a massive impact from the pandemic for residential real estate, particularly rentals. Very early in the year, rents were already declining and at that time I highlighted the importance of minimising vacancy, keeping your tenant and, should they leave, swiftly replacing them. That was pre-COVID and since then and through to today, circumstances are even more dire for landlords. From March, we were bombarded with calls from owners and tenants about how they were being affected. Our focus was to set up processes to bring calm and order, along with heart to individuals, so that the best available resolutions were discovered. Something that I felt was critical is that we were not just the bearers of bad news, but always suggesting strategies and solutions. It was tough on the property managers and I’m very proud of the way they worked and communicated.
With an expected falling population, many new properties being completed, reduced incomes and significant numbers of tenants deserting the inner city, frankly our owners now need tenants more than ever.
There are always situations when a tenant must move – life changes and living arrangements will inevitably follow. What is new, is that now many tenants are moving when they don’t need to – they just want to save money by paying less rent, even if it’s quite disruptive to their life. This is a great danger for all landlords and it means there is a second war out there.
Our response is multi-faceted. Firstly, we need to ensure that tenants would prefer to stay. Most do of course, because moving is costly and unsettling. Hence, we must respond to repair requests and look to any improvements that deliver benefit to the tenant as well as the property value. Keep the tenants happy is ‘business as usual’ for good property managers. Secondly, we must set the asking rent accurately and out compete other agents and landlords for new tenants. This is the battle front in the war.
Sales. Meanwhile, on the other side of the office, our sales department has been busier than ever.
The standout residential real estate market segment in 2020 is three-bedroom units & townhouses. Demand is higher than normal and consequently prices are stronger.
What’s caused this? It appears to be related to the new work and lifestyle patterns that have emerged because of the virus. People are spending more time at home; many are working from there of course and some feel this could well be a long-term change. Properties with a generous workspace and living areas makes owning a larger property a more practical decision.
The aspiration may be to buy a house, but for many the practicality is that a unit or townhouse must suffice. Most houses now command more than $2 Million, but Strata properties typically range from $1.2 Million to $2 Million.
What will 2021 bring? Rents are likely to continue to decline. From their peak, they are now down by 15% to 20% and the supply and demand issues are unlikely to be ameliorated for another two years.
Sales will remain comparatively strong, demand being reasonable due to very low interest rates, higher personal savings levels and a return to a stronger economy. The State Government is finally addressing the negative effects that Transfer Duty on real estate sales causes to first home buyers and every person who wants to relocate to more suitable accommodation. This should have a very positive effect at many levels over the coming decade.
What I’m thankful for? For my staff exceeding expectations in a turbulent year, for going above and beyond for our clients and for turning obstacles into opportunities. Both our number of sales and managed properties increased during the year.
Real Estate is endlessly fascinating and I’m enjoying it as much this year as ever, particularly as Marriott Lane celebrates 28 years in Crows Nest. We are seen by our clients, prospective clients and competitors as a leading agency in the Lower North Shore and possessing a great reputation. We are currently rated Number 1 in the vicinity by Google (240+ reviews at 4.8 stars) and Rate My Agent (Top 10 in Australia for Property Management).
I would like to thank you for the support you have shown us and I look forward to seeing you again next year. I wish you and your families a very happy festive season and New Year and a safe, prosperous and memorable 2021.