The asking price for a Melbourne rental has risen twice in one day due to ‘larger than expected demand’
This one bedroom apartment in Melbourne’s St Kilda is advertised as a delightful ground floor apartment with its own private courtyard and abundant natural light.
Interested tenants began signing up to inspect the property when the real estate agency notified them via email that the asking price had been raised to $425.
ABC understands it was initially listed at around $390 per week.
Later that same day in late August, a second email came out stating that the asking price had risen again to $450.
According to the letter, the change was made at the owner’s request “due to greater than expected market demand.”
In almost all Australian jurisdictions, rent bidding – where tenants are invited to bid higher than the advertised price – is prohibited and rent must be advertised at a fixed price rather than a set range.
However, property groups say this particular practice is legal, with the Real Estate Institute of Victoria (REIV) saying rental providers can increase or decrease advertised prices based on market conditions before a lease is signed.
On the other hand, rent advocacy organizations have criticized the practice as an unfair practice that exposes weak rental laws and leads to people being pushed out of the competitive rental market.
The modifications pushed the unit beyond the budget of one potential tenant ABC spoke to, who did not want to be identified.
Landlords can adjust rental property prices
The real estate agency leasing the property, Areal, said ensuring tenant longevity was a key factor in its considerations when it came to asking prices.
A spokesperson for the company said: “We work with a holistic view, it is from this perspective that we advise our clients, and it is these small differences such as keeping rent increases after a specified period to a minimum that make a big difference to our clients.” In the current situation.
“However, the reality is that any landlord can adjust rental property prices – up or down, at any time before they are rented.”
The real estate agency confirmed that the price was changed before inspections were carried out.
Advocates say the practice shows “loopholes” in current laws
When asked about the practice, Consumer Affairs Victoria said rental providers generally should be careful “not to engage in conduct that could be viewed as a solicitation or invitation for higher rental offers.”
Neither CAV nor REIV responded to questions about how common this practice is.
According to Better Renting, a community organization for tenants that advocates for better rights, they show “gaps” in current rental laws.
“In many other markets… we would not accept this type of behavior,” said Joel Dignam, the organization’s executive director.
Tenants in cities across Australia have had to contend with rising rents and paltry vacancy rates in recent months, and PropTrack data released in July recorded the cost of rent in Melbourne rising at a rate twice as fast as the national average.
An Ariel spokesman said that rising interest rates and inflation are pushing more people to rent rather than buy, leading to higher demand, while landlords are forced to cover the increasing costs of property ownership.
“All of these factors work together in a ‘perfect storm’ to effectively push prices higher, and given market volatility, changes happen almost overnight,” they said.
In one sense, adjusting the price based on market demand is “quite normal behavior,” Dignam said, but special attention should be paid to housing.
“When you raise prices like that, a whole bunch of people miss out on that house, and who knows where they will end up,” he said.
(tags for translation) Housing