REIV goes into bat for Melbourne

By Leith van Onselen

Following recent negative press about the dire state of Melbourne’s fringe housing estates, the Real Estate Institute of Victoria (REIV) yesterday argued that rental vacancies in Melbourne’s outer suburbs are the city’s tightest and that rents are likely to rise. From Property Observer:

Melbourne’s outer suburbs continued to have the lowest rental vacancy rate in Victoria, standing at just 1% in June, compared with 1.1% in May, according to the Real Estate Institute of Victoria.

In the middle and inner suburbs, the vacancy rate was 1.9%.

“If this trend continues, there might be upward pressure on rents following the stabilisation that occurred last year,” REIV chief executive Enzo Raimondo forecasts.

The overall vacancy rate for Melbourne is 1.8%, down from 2.1% in May.

“The metropolitan rate also showed a slight decrease throughout the first six months of the year, with the average vacancy rate at 2.1%, compared with 2.8% in the last six months of last year,” Raimondo says.

“Using the most recent data on the number of rental properties in Melbourne, the vacancy rate last month equated to about 4,600 vacant properties.”

The REIV’s reported vacancy rate, which is based on properties managed by REIV member agencies, is curious when considered alongside SQM Research’s figures, which are based on all monitored and unique online listings for the period of a calendar month.

According to SQM, Melbourne’s city-wide vacancy rate is currently 3.1%, with 11,427 properties advertised for rent:

The REIV’s contention that rental vacancy rates are tight on Melbourne’s fringe also does not concur with SQM’s figures, which shows both high and growing vacancy rates in these areas. For example:

Craigieburn (8.5%):

Doreen (27%):

Melton (9.5%):

Pakenham (6.1%):

Tarneit (8.2%):

Werribee (8%):

Wyndham Vale (12.2%):

Perhaps I am being overly paranoid about the massive housing oversupply facing Melbourne’s fringe. After all, according to the ANZ Property Research team, four out of Australia’s seven fastest growing areas are in outer-Melbourne:

And Melbourne is facing a worsening housing shortage:

Nothing to see here, folks… Move along…

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Unconventional Economist
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  1. I am noticing alot more ‘FOR RENT’ signs than I ever have in the past here in Melbournes Eastern suburbs.

    Combine that with the insane amount of building (both dual-occupancy + apartments) and this is not going to get any better for the landlords.

    It is almost impossible to go down any suburban street nowadays without seeing some sort of development going on.

  2. reusachtigeMEMBER

    What a load of tripe. The sad thing is that they can say whatever they like in regards to property and then call it “official”.

  3. Anyone regarding the REIV as a credible voice on property matters needs their head read.

    New build on Melbourne’s outskirts has far exceeded PPOR demand. The second option for builders and agents is to convince a bogan to negative gear and make their millions as a rentier – never mind the high capitalization/rent and structure depreciation make this a certain loss making investment for at least a decade.

    Hence the claim of rental shortages. They don’t need to worry about macro readers, the REIV is after the uninformed, and there are plenty out there.

    Don’t Buy Now!

    • reusachtigeMEMBER

      Sad but true. They are seruiously trying to con suckers into investment properties. They should be hung out!!

    • I was flicking through some old media releases put out by the REIV (Enzo at the helm). A great piece of work earlier this year when he advised that the old rule of thumb that property doubles every 7 – 10 years is valid, and likely to continue.

      Not sure what Enzo’s been smoking, but if that were true, the cost of the average family home would be somewhere in the order of $1.1 billion (price increase in past 130 yrs). Better start saving

      • “I was flicking through some old media releases put out by the REIV”

        Mate, you have to get out more.

        • haha…yeah I know. We’re in the process of putting together our annual review of the Au Residential market, and I thought for good humour I would throw in a few quotes from the guys in the know at REIV, REIA, RP, APM etc etc….

          That’s my story, and I’m sticking to it 🙂

    • It is a sad state of affairs when _The now major_ business model in this country is to prey on the financially illiterate.

    • Forrest GumpMEMBER

      Nicely put David. Here in WA we have the REIWA doing the same dance. As a result of the downturn in sales, REIWA has removed the “number weekly sales” from their home page and the “compared to last year” statistics.

      And in its place they have put “Weekly Rental vacancy Rate” as a percentage. The irony is REIWA and REIV are now spuruiking a “purported” low vacancy rentals as a rationale for buying.

      You are correct, REIWA and REIV are using scare tactics on renters. They are both purporting that rents must increase due to a high demand and low vacany rates. As usual there will be some suckers that fall for this.

      The data that they use is not audited. A recent study showed that REIWA had fudged its own press releases. On the REIWA web site, it had showed 3% vacancy rate, but on its press release it noted that it was much lower.

      You cannot trust these mugs, and i agree that they should be punished for issuing misleading information.

      If this was the ASX, then REIV and REIWA would be gone…all over red rover…Since you cannot issue deceitfull statements that are misleading to the public.

      Again, Ironically, the housing market is much larger is value that the ASX, but is not subject to the same strict financial reporting standards as the ASX. In fact its not required to comply with ANY consumer or commerical protection, or financial reporting standards…consumer protection? Go figgure..

    • I’d say that a chunk of that would be attributable to places under construction… that said, I’m not sure why you would want to live there. At least Craigeburn has easy access to the highway

      • “SQM….based on all monitored and unique online listings for the period of a calendar month.”

        Would they be listing homes under construction for rent?

        • Oh .. here in Radelaide they do!!!

          Right in front of my apartment block, a 4 townhouses under construction, will take another 4 months to finish have “for rent” signs on them but interestingly they don’t appear on-line!

          • The Patrician

            Yeah, time to put those old REIV media releases in the bin. You are risking permanent damage.

  4. BTW, the ANZ chart made it to Alan Kohler’s ABC News spot 🙂

    I haven’t seen a single media report that has objectively questioned the ANZ on their Orwellian shortage report.

  5. I’ve been expecting prices to fall in Melbourne, but they have recently turned upwards.
    They are a wierd mob in Victoria.

    • REIV & their cronies doing their best to call a market bottom… surely they’re switched on enough to see the iceberg approaching – you would think they would prefer to slow down a little before crashing….

    • I doubt it. I did an inspection on one in Ivanhoe recently. Land value only in my opinion, near 600sqm block that sold for $565K. I haven’t seen a flat sell in Ivanhoe for under $600K since pre 2005. If $1000/sqm is now the going rate on unimproved land then it’s down at least 30% on two years ago. And that’s a blue chipper. I’m with Louis at the moment.

      • Ivanhoe/Eaglemont has the oldest Demographic in all of Melbourne – with an average age over 60 at the last Census.

        Old age will catch up with property prices in this area, and extend through Bulleen & Doncaster too.

    • russellsmith55

      The market is completely dysfunctional here in sunny Victoria, the smart are staying the hell out and scratching their heads from the sidelines 😀

    • SchillersMEMBER

      Just wondering how monthly RE “prices” are calculated. If sales in the outer fringe suburbs have genuinely fallen off a cliff, then wouldn’t the overall average price trend up for a while, if only because there are next to no sales in the entry level/bottom end of the market?

  6. To be fair, there are a number of outer-ring postcodes still recording some tight vacancy rates, particuarly in Melbourne’s East and South East.

    E.g Ferntree Gully (3156)

    Dandenong (3175)

    Croydon (3136)

    Also, with 3754, that looks a little too high and we will check that out further. Given the rapid growth in dwellings thats happened there and discussed here last night, there is a chance we maybe behind the curve on our denominator for that postcode.

    Outside this, we take the position that there are elevated vacancies in a number of outer ring areas but not all outer ring areas.

    • I grew up in Croydon (family still lives there) and live a little bit further out in Montrose now.. Property prices around the outer east (i.e. Ringwood to Lilydale to Ferntree Gully) are not in massive decline.

      The reason is simple – demographics.

      The outer east was full of kids in the 80’s and 90’s – and many of them are settling down to have children (including me).

      A lot of them 5 years ago moved down to the South East (i.e. Pakenham way) because it was the only affordable option.

      A lot of them now are buying closer to home (see family), putting a floor under prices.

      The outer east has established infrastructure (i.e. schools half empty in areas around Ringwood, Heathmont, etc.), Express Trains to the city with ample station car parking, and lots of medical facilities.

      I’m finding a lot of people i grew up with are moving back to the East – after either buying South East, or renting Inner East..

      Combined with the fact there are no new estates being produced (due to the constraints of the Dandenongs, Yarra Valley, etc.) – there is not the supply risk of massive development a few kms down the road either.

      My guess would be that the Outer East will only fall about half as much (if not less) as the Outer South East, North, and West.

      Anyone agree?

      • What’s happening to their outer South East digs? Are they selling them, renting them out?

        • Bit of both… I know two people that are trying to “come back” from the South East..

          One is trying to sell to fund the house they have purchased in Croydon. They are moving from a 3 year old house they built, to a 40 year old house that needs a serious renovation. Problem is there is a disconnection in price expectation.

          They expect that there “new build” will sell for $380k, even though it only cost them $280k to build it. They purchased a property in Croydon that would have been ~$420k 18 months ago, for $390k. So trying to get the best of both worlds (i.e. trying to get experience price inflation on the selling side, and price deflation on the purchase side)…. Makes me wonder how many people are trying to “hope some dumb sucker” comes along on the sale side, in order for them to purchase something discounted on the buy side.. (interestingly, parent’s are helping this couple out while they sort out this mess……)

          The other couple is keeping the property as a rental – as they have a higher household income to support this.

          My fiancee’s brother works in real estate (property manager) and says the amount of “off the market” houses for sale being registered around the Carnegie/Murrumbeena area is insane.. Apparently real estate agent’s have two lists.
          – Properties for sale.
          – Properties available.

          Once an agent sniffs out what a buyer is “looking for”, then he introduces a “property available” as if it’s just “on the market” and has lots of interest…

          If the “advertised” properties are up in numbers… I’d love to see what the “registered” numbers are doing… the combined number would be scary..

      • Who knows what will happen, but this article from January seems to indicate something different.

        The REIV’s December quarter figures show Lysterfield* fared the worst over the past year, with the median property price dropping 32.5 per cent from $862,750 down to $582,500.

        Other suburbs to lose out over the year were Wantirna (-17.2 per cent), Bayswater* (-10.4 per cent), Ferntree Gully (-9.2 per cent), Scoresby* (-5.6 per cent), Boronia (-3.7 per cent), Rowville (-3.2 per cent) and Knoxfield* (-2.5 per cent).

        • Most of those suburbs are in “no mans land”.

          The “Knox belt” (i.e. Rowville, Knoxfield, Wantirna, Wantirna South) all suffer from the fact they are not close to public transport. Bayswater, Boronia & FTG are protected to an extent by the Belgrave train line & proximity to Mt Dandenong.

          Lysterfield is an outlier – as there is a big mix of properties there (i.e. big acreages, some newer Pakenham+ style developments), so the decline in that area is probably due to the “property type” being sold more then an actual decline. (i.e. less big acreages being sold, and more of the subdivided sort).

          • “”The “Knox belt” (i.e. Rowville, Knoxfield, Wantirna, Wantirna South) all suffer from the fact they are not close to public transport.””

            What, aside from the fact they are dumps!

  7. GunnamattaMEMBER

    Great spotting by the fellas at the REIV…….

    Good signal

    Now that buyers are holding off on buying overpriced properties, it is time to start holding renters to ransom.

  8. Anyone notice that hellish article about the fringes of Melbourne in the The Age disappeared from the top of the page by lunch time yesterday?

    That was despite it generating 200+ comments, which later seemed to disappear when I found the article later in the day.

    • Yeah – Saw that too…. As soon it got hundreds of comments saying it “was about time”, and the “bubble is bursting” – it got removed.

      Stinks of the real estate lobby ringing up Fairfax and saying “pull the article from the website, or else we will pull our advertising from you”… The RE industry would have to be the biggest income stream for Fairfax (from an advertising POV)..

      Would be interesting to see where in the Printed paper the article was placed – my guess was page 99 next to the form guide.

      • russellsmith55

        Gina is going about it the wrong way… if she just made them reliant on her for advertising revenue, she could much more easily get at least the level of editorial power that the property interests have.

        The one who pays the bills makes the decisions after all.

      • Was front page on the print version from what I remember- with the article continuing to page 3.

  9. Refind house prices has just gone down again.

    It went down a while ago as well, ……wonder if its all part of the tactics.

    • That site as great as it has been, is a complete mystery. Who runs it? I recall it going down during the worst of the crunch circa 2009 and then reincarnating shortly after under a slightly different URL.

      Maybe BD could shed some light, given his business offers similar products?

    • More interestingly, there was a time mid to late last year, when ‘age’ of all properties on ‘refindhouseprices’ were ‘reset’!!!!!!! to 5 days max!

      • Aristophrenia

        Both correct.

        When it went down last year I did some searching on who is, domain look ups, bit of scanning around and found an email address and contacted them asking them to get it back up. I think they were in Italy as I recall ???

        Anyway, it went back up fairly quickly.

        As a software person, it appears to be a scrapper, it scans sites for info. You will notice it goes to an site with a redirection and also has view by site – but only EVER offers Domain listings.

        It appears to be Italian, used around the world for different markets, as it was active in the UK and they had it shut down.

        Would be very, very unsurprised if that is what is happening here. my view is that it gets hacked every now and again and is simply restored with back ups as it appears to still have full functionality when it goes down, but the data is corrupted.

        Someone should put in a some effort to find out who is doing it and expose them.