End of stamp duty concessions to send rental treadmill into overdrive in 2012

Media release

Friday 9 December, 2011

 

End of stamp duty concessions to send rental treadmill into overdrive in 2012


  • The end of stamp duty concessions for first home buyers on 1 January, 2012 is set to squeeze rental vacancy rates across NSW
  • Some tenants are set to pay up to 5% above the asking price to secure suitable rental homes
  • Traditional tertiary education-dominated rental markets such as Sydney’s east, Bathurst and Newcastle expected to experience strong competition for rental homes after Christmas. 

 

The abolition of the stamp duty concessions for first home buyers, combined with the return of university students in January, is expected to squeeze rental markets already bursting at the seams, says leading real estate group Raine & Horne.

Raine & Horne CEO Angus Raine said that across NSW, average rental vacancies were close to 1.5%, which would be exacerbated by the state government’s decision to scratch stamp duty exemptions, aimed originally at helping people off the rental treadmill.

“Add the traditional race for student accommodation in late January and February and my advice would be to get your skates on now if you’re planning on securing suitable rental accommodation in 2012," Mr Raine said.

In Kensington, home to the University of NSW, John Paras, co-principal of Raine & Horne Kensington, said the end of the first home buyer exemptions would create a log-jam for an already manic eastern suburbs rental market.

“Fewer people will exit the rental market in the early months of 2012 as a result of changes to stamp duty and this will serve only to intensify the traditional madhouse grab for rental homes early in the new year,” Mr Paras said.

“Consequently, we expect to see prospective tenants offering to pay $20 - $30 more to secure two bedroom apartments currently attracting weekly rents in the early to mid $500s.”

Matt Clifton, co-principal of Raine & Horne Bathurst agrees the end of the first home buyer stamp duty concessions could squeeze the local rental market, dominated by students from Charles Sturt University and the Western Institute of TAFE.

Mr Clifton estimates that university and TAFE students represent between 30-40% of Bathurst’s rental market.

“The rental market has eased, typical for early December, with vacancy rates hovering around 2.5%,” he said.

“However the residential tenancy market will tighten rapidly in January as students return, with three to four bedroom homes, which rent from $320 a week, a popular pick for Bathurst tenants.

“Throw in disenchanted first home buyers, and now is definitely the time to grab a suitable rental home before the New Year rush.”

In Newcastle, Jason Maxwell, principal of Raine & Horne Newcastle, expects the termination of stamp duty exemptions will force more individuals to reconsider their home ownership plans.

“To buy a $300,000 established home from the start of next year will mean finding an additional $9000, which could take many workers considerable months if not years to save,” Mr Maxwell said.

“As a result the natural migration from the rental treadmill to home ownership will be stretched out for many aspiring home owners, while also placing additional pressure on Newcastle’s rental market.

“I expect to see rental vacancy rates squeezed tightly in popular rental suburbs around the University of Newcastle such as Jesmond, Wallsend and Hamilton North as we experience the double whammy of returning university students and the end of the first home buyer exemptions.

“We also find some students prefer to live closer to beaches and therefore grab cheaper apartments in the CBD, so I would encourage anyone considering a Newcastle rental home to make the move now, as it could be a bloodbath in January.”

Angus Raine’s tips for beating the 2012 rental squeeze

  • Treat every appointment with a property manager and open homes like a job interview
  • Be punctual and present professionally
  • For younger people, it helps if your parents can attend meetings with property managers – and/or offer a rental guarantee.
  • References from former property managers, landlords, employers, university lecturers, TAFE and school teachers, solicitors and accountants are a must.
  • Make sure you front with paper work such as a motor vehicle licence, passport and bank statements.
  • In the current environment, if you’re offered a property, it would be best to take it immediately, or you could miss out.

Raine & Horne is an iconic Australian property firm, with more than 360 offices worldwide. Also an established Superbrand along with Qantas, Vegemite, Woolworths and Myer, the company has four distinct property service brands including Raine & Horne Residential, Raine & Horne Commercial, Raine & Horne Rural and Raine & Horne Financial.

-ENDS-

For further media information contact:

Angus Raine, CEO Raine & Horne on 02 9258 5400

Kit Bashford, National Marketing & Communications Manager on 02 9258 540