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What Women Want - With Abby Crawford

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Rentals rise while prices falter

06 Nov 2017

Rentals rise while prices falter Image

By James Manton

Despite low attendance rates and an increasing supply, rental prices in Docklands apartments continue to rise while property prices have stagnated.

A realestate.com.au analysis of the rental market in the suburb shows that while inspection rates and online property views have dropped recently, the median unit rental cost has still increased.

Over the past 12 months, data from realestate.com.au shows that the median rental price is around $550 per week - $20 more expensive than last year and just $10 shy of the highest price of the past decade ($560 in 2011). The data also suggests that a Docklands unit that is on the market receives on average only 167 visitors, well below the state average of 837.

However, conversely, the cost of buying a unit has stagnated in recent years and actually dropped from its peak in 2010.

On average, a unit will cost around $568,500, down from the high of $637,500 in 2010 according to realestate.com.au.

However, the Real Estate Institute of Victoria (REIV) is more optimistic about Docklands prices, recording a rise in the September quarter from around $539,000 to $587,000, while the Melbourne metropolitan average has dropped from $607,000 to $587,000

According to Domain, 64 per cent of the properties in Docklands are rented while only 14 per cent are fully owned.

As real estate agents do not have to provide property sale figures to a single authority, statistics between REIV, realestate.com.au and Domain can often vary.

Glenn Donnelly from City Residential Real Estate in Victoria Harbour said that a booming population growth in the area and “vacancy rates practically at zero” were keeping rental prices high, even with “at least another 6000” new apartments to be built in the next few years.

Mr Donnelly also said that, despite low visitor and viewing figures for Docklands apartments, many were being rented to “walk-ins” off the street.

While he was unsure specifically why there was such a dichotomy between rental prices and selling prices, Mr Donnelly said it might be because of the number of single-bedroom units that have been built recently.

However, Dylan Emmett from Lucas Real Estate said the low cost of buying a unit and relatively high rents were proving beneficial for investors.

“Rental prices have been going up, no doubt about it,” Mr Emmett said. “There’s no doubt prices will begin to go up once we have a development slow-down, just like any area. Once the land’s actually taken up then the demand starts to overcome supply and prices go up.”

“From a cash flow perspective, our rental properties generally have a return of 5 to 5.5 per cent … you go to other areas of Melbourne, you’ll get 2.5 to 3 [per cent].”

Mr Emmett said that the low inspection rates could be attributed to other areas receiving significant numbers of people just having a look as opposed to serious buyers.

“It always has been the case [that Docklands receives fewer visitors at inspections],” he said.

“I think with Docklands, people are predisposed to the idea of living in the area already. They’ve already decided ‘that’s my destination, I’m going there’.”

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