Renters – You have arrived at your destination

Posted by Helen Matsoukas

Most of us, except maybe Erin and Josh as 2001 babies, will remember the famous tourism campaign that first aired in early 2006. A campaign that saw $1.8 million spent on the promise to boost tourism to our great country. Led by then Tourism Minister Scott Morrison, the ad was designed by the Sydney office of the London advertising agency M&C Saatchi.
The ad unsurprisingly showcased some of Australia’s most iconic and beautiful scenery. A then 18-year-old Lara Bingle, who still, in my opinion, has the hottest blunt bob in the business, closes the advert with her standing on Fingal Bay in a bikini saying ‘So where the bloody hell are you?’

Whilst memorable and some would say iconic, the ad according to key people in the industry, was an epic fail! Or was it?

Criticised for being provocative, the ad was banned in the UK in 2007 for being inappropriate (ironic) for such a campaign. How dare we use the term ‘bloody’ and encourage irresponsible beer drinking. Canada also banned the ad shocked at the ungodly use of both terms ‘bloody’ and ‘hell’. Later in 2008, the UK came to its double-standard senses and allowed the ads to be aired after 9 pm. However, all billboards were stripped and replaced by less inappropriate ads like the clothing brand FCUK (insert eye roll).

Despite the controversy and initial results reporting a decrease in visitors from key countries like China, America and the UK (and the rumoured reason why Scott Morrison lost his job as Tourism minister), the ad delivered in spades. An article published by The Age in late 2007, corrected the campaign’s effectiveness and reported an increase of $1.8 billion in tourism spending. The campaign also nailed what was one of the underlying primary goals, to attract longer-staying visitors and highlight Australia as a place to call home!

It’s bloody obvious why Australia stands out from other countries as being one of the most popular destinations for long and short-term visitors. Australia is one of the most welcoming countries with an extensive support network for all visitors, which is one of the most significant reasons it has today cemented its position in the top 5 destinations for people eager to live, study, work and visit.

Let’s be honest; there was some doubt and concern about what type of long-term impacts COVID might have. Would we ever see returning visitors? What will migration look like? Will our international students return to our cities? I can tell you, hand on heart, after seeing my city abandoned and displaced and Melbourne’s vacancy rate rocketed to over 14% in some parts, I was a little anxious.

BUT, where nearly 32% of our population are renters, and a large pool of these renters are from abroad, I (we) needed to be as optimistic as hell.

In 2022, we saw a glimpse of the possibilities, and pent-up demand from international students started to filter through. The first indicator that Australia would get back on track was the increased surge in English Language Testing, generally taken before completing all visa applications for non-English speaking applicants. The surge was so great that some believe that not only will we get back to 2019 levels, but we could break all pre-pandemic records.

China was our biggest concern and was initially considered one of our weaker returning markets. A significant review by TEQSA (Tertiary Education Quality and Standards Agency), however propelled the move back. An announcement in late October last year stated that by June 2023, all international students would be required to return to in-class learning for their degrees to be accredited, as China accounts for approximately 37.3% of ALL overseas students. This was a big deal!

Buoyancy didn’t stop there; earlier moves by the Morrison Government to uncap the number of hours international students could work have been believed to have significantly impacted international students applying to study from other countries. According to the Financial Review, the removal of the capped 40 hours per fortnight rule has now provided opportunities for students who need the ability to work to support their living and study needs. Applications from Nepal and India have tripled since the announcement. And as net migration reaches an all-time high in the UK and Prime Minister Rishi Sunak considers limiting international student admissions, a student wanting to study abroad will inevitably detour to Australia.

The return of international students, visa workers and the return of short-term visitors will continue to put pressure on our already distressed rental market. Demand will far outweigh supply for at least another two to three years, and I expect most rents will achieve additional increases of more than 7% in 2023.

In a fast-moving rental market, and I’m telling you it’s absurdly fast, the most common question is, ‘how much should I increase the rent by?’. My answer is always the same, as much as can be justified by the current market conditions, and right now, our market conditions are high. Your Property Manager is the best person to review your rent. They should guide you and clearly indicate where the current market is and what increase amount can be justified. There are notice periods required, so your property manager needs to be proactive and forward-plan to ensure opportunities are not missed, especially where pressure is mounting with holding costs.

As your Property Management Integration Manager, I am always here to help you in any way I can. I’ve had many conversations with our landlords who want to find the balance between a hefty increase to help ease some of the additional cost burdens and the hesitation of imposing an additional $100 – $150 of weekly rent on their tenants. That in itself makes Aussies great people. Why wouldn’t you want to live here?

Explore the benefits of rentvesting as a property investment strategy and take action towards building your wealth portfolio today.

Posted by Helen Matsoukas, on 10th Mar 2023