Now is the time of the Landlord Generation

Gen X? Gen Y? Millennials? Well in the property market we’ve hit the ‘Landlord Generation’.

This Landlord generation are investors expanding their property and in turn rental portfolios. Despite media reports of an oversupply, the Melbourne residential market continues to grow and given population forecasts there is no slow down.

The end of the financial year will herald the end of major stamp duty benefits to local hardworking investors as the Government continues its rampage on slowing new off-the-plan apartment construction in Melbourne due to fears of oversupply.

Contrary to the popular cry of the media that there is an oversupply of apartments, I actually see a tremendous undersupply. Over 100,000 people migrated to Melbourne last year.

That figure is somewhere close to double the long-term average.

The Off the Plan Market in Melbourne is split into two distinct areas.

  1. CBD, Sth Bank, Docklands

Typically, high density, smaller apartments with higher risk of valuation issues come settlement, lower capital growth, higher rental yields, high percentage of off shore sales.

  1. Inner City Suburbs (2-20 kmsfrom CBD)

Low to med density, higher specs, usually larger apartments, higher percentage of local buyers (downsizers, local investors and FHB0), higher capital growth and steady rental yields.

Being an investor myself, the thought of paying stamp duty on something that doesn’t exist yet is ridiculous. However, it still makes good sense to invest in off the plan apartments given rents are strong and vacancy rates in suburbs are low.

We need sustainable buying conditions to ensure the market keeps moving forward and investors or the landlord generation keep buying. The demand on renting availability is evident when you witness lines at rental viewing in key areas such as South Yarra, Richmond, Hawthorn, Fitzroy, Carlton and Collingwood.

Affordability in Melbourne is an issue to a certain extent. Buyers want the postcode without the price tag hence apartment living is so crucial. In the same breath renting affordability is just as important as many prospective buyers don’t have sufficient deposit and/or not in a qualified position to buy.

This is a great situation for this new landlord generation who accumulate properties with the plan to enjoy the capital growth and increased rent over time. Many of these investors will rely heavily on their property portfolio as opposed to their superannuation as a way to live a great life past retirement.

 

Nic Cuni is Executive Director of Melbourne-based full service real estate company EST8 Agency

1 comment

Bilby's picture

Landlord generation shopping list:

Milk
Eggs
Sugar
Spring onions
Parmesan
Linguine
Toilet paper
2 bed apartment in Collingwood

Back to top

Development & Planning

Monday, January 22, 2018 - 00:00
Hot on the heels of news that Holiday Inn will anchor Werribee's tallest proposed development, the application for 22-26 Synnot Street has gone to advertising. At over 42 metres in height and spread across a 2,567 square metre site the project is Werribee's largest, and accounts for the last of a trio of catalyst sites earmarked by Wyndham City Council as perfect for urban renewal.

Policy, Culture & Opinion

Monday, November 20, 2017 - 12:00
The marriage of old and new can be a difficult process, particularly when the existing structure has intrinsic heritage value. In previous times Fitzroy's 237 Napier Street served as the home of furniture manufacturer C.F. Rojo and Sons. Taking root during 1887, Christobel Rojo oversaw operations though over time the site would become home to furniture manufacturer Thonet.

Visual Melbourne

Friday, August 25, 2017 - 07:00
The former site of John Batman's home, Batman's Hill is entering the final stages of its redevelopment. Collins Square's final tower has begun its skyward ascent, as has Lendlease's Melbourne Quarter Commercial and Residential precinct already. Melbourne Quarter's first stage is at construction and involves a new 12-storey home for consultancy firm Arup along with a skypark.

Transport & Design

Wednesday, January 24, 2018 - 12:00
You may have seen photos from the mock-up train design back in October . It’s been part of a consultation process over about the past year, which has concluded. As the Herald Sun reported on the weekend (paywall), the finishing touches are now being put on the design.

Sustainability & Environment

Tuesday, January 23, 2018 - 00:00
Likened in some quarters as a miniature Federation Square, construction works began last week on a Prahran project that will rank as one of 2018's most progressive and important. Kane Constructions has the job of transforming 30-40 Izett Street under a $60+ million urban renewal initiative prompted by Stonnington City Council.