In Australia currently 33% of properties are rented. This increase in renting has called for a growth in the property management industry. The residential rental market comprises 2.3 billion households with 6 billion residents.
The market generates $3.8 billion per annum. This is only continuing to grow; it has grown 6.5% over the last 5 years and will continue to grow and reach $4.3 billion in 2020.
Changes in the Industry
Property management is shifting towards autonomy from general real estate and is establishing itself as a stand-alone business. Companies are trying to increase the number of property portfolios they manage to 1,000.
This has become the new desirable number. These super portfolios will have effects on the market multiples of the future, as well as be able to influence the market price.
Rent Bidding Trend
Rent bidding has also become a trend in Australia. Rentberry is an American company that has recently announced it’s arrival in Australia. Rent bidding allows tenants to make offers on apartments in an eBay bidding style.
This type of bidding is causing concerns that renters will financially overcommit themselves after being caught up in the bidding process. This could encourage them to make financial commitments they cannot hold up in the long term. It also raises fears that it encourages tenants to pay prices higher than the market rate which will put renting out of reach for many tenants.
Can We Prevent Concerns Brought On By Rent Bidding?
Live Offer, Rentberry’s Australian competitor, says their app will create a much fairer market value rate. Live Offer allows tenants to enter their preferred move in date, price, and length of lease. Landlords also enter in this information and an algorithm places them together. It differs from Rentberry because it also takes into account a tenant’s credibility as a renter.
Rentwolf is a similar app that also just announced its launch in Australia. Both Rentwolf and Live Offer allow tenants to use other factors such as their credit and experience as a renter to gain leverage.
Tenants see how they are placed against other applicants. The other factors such as lease length and credibility can outweigh price, so it is not just purely bidding.