Real estate agents and apartment owners are struggling to find rental tenants with a ‘chronic oversupply’ of apartments in Melbourne and Sydney.
Data shows that weekly rents in the Melbourne suburb of Southbank have fallen 6.4 per cent in the past 12 months, while the yield on property in Sydney has fallen by almost 5 per cent.
Property consultant Margaret Lomas told the Australian Financial Review that the supply of apartments was growing faster than demand.
“There’s an increasing demand for inner-city living, but the supply is going much faster than that demand,” said Ms Lomas.
“There’s chronic oversupply.”
Real estate agents are now offering incentives in an attempt to lure potential tenants, such as offering the first month rent-free.
There are 17,000 apartments in the pipeline in Central Melbourne, with the City of Melbourne now considering imposing a $900 levy on each new apartment.
Buyers agent Paul Osborne said investors should look for apartments with unique characteristics, which are easier to rent.
“Our advice is to stick to property that has certain unique characteristics such as a great view, spacious interiors, good design, quality build and natural light,” said Mr Osborne.
“However, investors that have purchased a pure commodity of an apartment will find it hard to either establish tenants or future buyers.”