market shifts and insurance impacts

I’m reminded of an ancient Chinese curse that reads: “may you live in interesting times”.

The past couple of years have certainly been interesting for the property and insurance industries.

And 2023 has been no exception!

Here are 10 snippets from the highlights reel of the biggest changes in real estate this year – and a note about the impact on insurance..

Record low vacancies

Throughout the year, the vacancy rate has hovered around one per cent.

The September quarter saw the vacancy rate reach a record low of 1.1 per cent (according to CoreLogic) – the lowest level since early November 2012.

With less than 33,000 residential properties available across the nation in November (according to SQM Research), there is an acute shortage of rentals available.

In fact, Australia needs a further 70,000 rentals to balance the market (according to Domain).

Insurance note: If you have properties on your rent roll that have been vacant for an extended period (while unlikely to be due to market forces and more likely to be a case of either the owner choosing to leave the rental vacant for some reason, or circumstances such as major repairs being required), be sure to check in with the landlord insurance provider. Most insurance policies have conditions or may be void once the property has been vacant for an extended period (it varies between insurers but for EBM RentCover it’s 90 consecutive days) and arrangements will need to be made to keep the property insured.

Rents reach new highs

In the September quarter, the national median asking rent for a house hit $600 a week – up more than 13 per cent over the year, while across the nation’s combined capitals, the cost of renting a unit was the same as renting a house – $600 a week – after prices rose almost 24 per cent over the year (according to Domain).

By that third quarter of the calendar year, national rents had risen for 38 consecutive months, taking rents 30.4 per cent higher than in July 2020 and adding the equivalent of $137 to the median weekly rent (according to CoreLogic).

Insurance note: If your landlord has increased the rent, it’s important to make sure the documentation is also updated. This includes advising the landlord insurance provider of the increase. Any loss of rent payout is likely to be based on the documented rent, so it pays to make sure the paperwork is up-to-date. Also be sure to check that the asking rent doesn’t exceed the maximum rent that the insurer covers (at EBM RentCover that’s $1500 per week). If it does, negotiation with the insurer will be needed.

Home price recovery

Following incredible price growth in 2021, house prices took a dive in 2022, and began recovering in 2023.

Property market commentators (including Domain, PropTrack and CoreLogic) expect house prices to fully recover by the end of this year.   

Insurance note: It’s important to remember that when it comes…