Analysis: house prices in Australia are soaring, but not because there aren't enough homes

House prices are climbing, alright — but not for the reason you might think

 

My take away:

John Maynard Keynes described investing as a game in which the best strategy is not to put money into what you think is worthwhile, but to put money into what you think other people will think is worthwhile.

"we devote our intelligences to anticipating what average opinion expects the average opinion to be"

 

Where'd you get this information from? I was not aware, but that's very good news, it means that a 10% increase in rent is not unrealistic.

 

''If there really weren’t enough homes for people who wanted them, it would be more than property prices soaring; it would be rents.

Instead, overall rents have been barely moving – growing even more slowly than wages – for half a decade.''

In the CBD of Sydney/Melbourne perhaps.

Across the majority of regional Australia vacancy rates are at historic lows and rents are skyrocketing accordingly.

So this article is typical of the Sydney/Melbourne-centric diatribe.

The journo should take a trip to regional Australia or Perth:

SQM Research - Property - Weekly Rents - Perth

SQM Research - Property - Residential Vacancy Rates - Perth

 

This is the case in Adelaide as well! Very low vacancy rates, steadily rising rents and with record low interest rates it's literally cheaper having a mortgage than renting the equivalent property in most suburbs.

As for the article the reasons for the high rates of capital growth have been put down to the tax system (capital gains tax discount) and speculation. That makes sense. I look at Sydney and the yields don't stack up at all but people think the $2 million house today will probably be worth $2.5 million in 5 years time and today's prices will seem cheap by comparison. Whether this is sustainable in the future remains to be seen.

 

It’s from the article in OP

 

Rents are increasing in areas I hold property, there is a real shortage of rentals

One we’ve increased $50 per week.
Another we are looking at approx $75 per week !

freestanding houses on land in mornington peninsula area Melbourne

another increase of $20 in an outer south east first home buyer area of melbourne.

brisbane agents are telling me we can definitely increase rents when it comes time also

Won’t be long till there will be “rental crisis” headlines in the media I reckon

 

They started beating investors with a stick in 2015. 6 years now. Can’t be long now till we see the fallout from a rent perspective.

Apparently investor borrowing is still anemic so there doesn’t appear to be anything in the pipeline to change this.

 

Meanwhile in Australia..... Almost 100B AUD was printed in 2 months.