Glut forcing rental rates down

By MARK HAIHUIE
RENTAL rates have dropped since late last year and are expected to decline further this year, says Century 21 executive chairman Brian Hull.
Hull said that about 40 per cent of residential units in the oversupplied market had been vacant for a number of months with realtors struggling to lease them out.
This is the case in Port Moresby, especially in the top-end market.
“Since last year, the top-end of the real estate market has come down by 50 per cent and decline has affected all segments of the market as well,” he said.
“The top end are apartments in the town area with other levels of residential apartments or units.
“There are vacancies everywhere at the moment – an overall average would be around 40 per cent.
“This decline will go on for rest of the year and onto next year as well.
“Landlords have had to reduce rentals from what they had been charging a few years back and really negotiate and settle for less.
“Those that are still maintaining unrealistic price ranges from previous years are only doing so to keep up with loan repayments to the bank and are struggling to get people into their apartments.”
Hull said a high number of vacancies in the top-end of the market was linked to an increase of expatriates leaving the country in recent years.
He said regulation of the market was not an option to alleviate the situation.
“The market should not be regulated because if you make the rental too low then the landlords cannot pay back the bank or can’t adequately maintain the property,” he said.
“And that leads to totally bankrupt landlords.
“The market is tough on landlords and won’t be helped with government regulation.”