Bundy rental market overheating as investors feel the pinch
THE Bundaberg rental market is experiencing an unprecedented influx of tenants this month, with some real estate agents struggling to meet the hectic demand.
Renters currently applying for properties are being forced to put their best foot forward to put them ahead in the eyes of landlords, according to RE/MAX Precision's Scott Mackey.
Last week 32 groups registered with RE/MAX Precision to inspect a four-bedroom, two-bathroom Bundaberg East property - more than double the average for this time of year, which is traditionally the busiest period.
Proving the rental high was a widespread trend, principal of Bundaberg City Realty, Micheala Price, said the "amount of inquiries has been huge".
Ms Price said while it was a positive shift, the demand was hard to meet for the smaller real estates in town.
"It makes it a bit difficult when you've got so many inquiries and no properties to rent," she said.
Real estate agents are seeing tenants offering to pay six months in advance.
Mr Mackey said the practice was not only beneficial for tenants trying to secure high-demand rentals, but helpful in getting the "best" result for landlords amid such a competitive rental market.
"Lack of building new properties suitable for the market demand is also linked to our baby boomers, who are entering the pension phase and selling their investment properties to maximise super," he said.
The real estate agent partially blamed the shortage of rental properties on the Banking Royal Commission, which had caused banks to become tougher on investors.
"The main change is the end of the interest-only facility being able to be extended, which has been how many investors have financed their properties for decades, using time to pass and capital gain to occur along with rents rising," Mr Mackey told the NewsMail.
"Now that you're required to pay both principal and interest (sooner), the ability to service a loan has become tougher for many investors."
Prior to the Banking Royal Commission, investors had the ability to extend or refinance to another lender in order to continue using interest-only facilities (a more affordable payment method to begin with).
However, when the interest-only period ends, the principal as well as the interest must be repaid, and, with less time to pay it off, repayments are usually a lot higher.
"Finding an extra $400 per month to pay off the loan has to come from somewhere," Mr Mackey said.