Rental demand has come off the boil marginally through August, but the market remains tight. Across our portfolio, properties are leasing in an average of just 11 days, which is still very fast by historical standards.
Rents are continuing to edge higher, particularly for properties that haven't had a meaningful increase for several years. Demand is still slightly outpacing supply and, as we move into the warmer months, we'd expect the usual seasonal lift in activity to add further pressure.
The more interesting story right now is what investors are doing following the Federal Budget changes.
So far, the answer is: mostly watching and waiting.
We haven't seen a flood of existing investors selling. Most appear to be holding their assets, working through the changes with their accountants and assessing what the new environment means for them. The grandfathering provisions clearly matter.
Where the change is much more obvious is with new investors entering the market. Investor lending activity has fallen sharply since May and, on the ground, we're seeing very few new investors actively looking to purchase.
Interestingly, another source of rental supply is starting to emerge. We're seeing more existing homeowners retain their current residence as an investment property when they move, rather than selling it.
We're providing plenty of updated rental and sales assessments for our clients as they consider their options, but for now we'd describe existing investors as being firmly in observation mode rather than exit mode.
It's an evolving space and one we'll continue to watch closely as the impact of the changes becomes clearer through spring.
