Rents fall sharply as virus takes its toll

Discussion in 'Property Market Economics' started by Peter2013, 28th Jul, 2020.

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  1. Peter2013

    Peter2013 Well-Known Member

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  2. Property Baron

    Property Baron Well-Known Member

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    Who knows - Scomo might have a Rentsaver subsidy next - Why not - whats another 200 billion when apparently it doesn't matter how much is spent because the interest rates are so low..
     
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  3. Spiralkut

    Spiralkut Well-Known Member

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    I don't really buy into all these graphs when it's considering the whole city. I'm looking at upping my rents once current contracts end.
     
  4. MTR

    MTR Well-Known Member

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    Lol
    Yes well they are waiting for 0 cases or a vaccine... what’s another 200 billion.

    Inherit debt.......It will be my children paying it and their children paying for it:eek:
     
  5. MTR

    MTR Well-Known Member

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    I will take Perth number, rental market tightening, charts showing this
     
  6. Property Baron

    Property Baron Well-Known Member

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    They won't be able to give units away soon
     
  7. gman65

    gman65 Well-Known Member

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    So it's less than 1%, or statistically insignificant for houses in the major cities :rolleyes: hardly "falling sharply" so far.

    I think for a long-time many on here have been telling people not to buy units, especially in high-rises, so no surprise those are starting to fall.
     
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  8. Buynow

    Buynow Well-Known Member

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    These numbers reflect average rents paid not asking rents which have fallen more. It takes time for all those on fixed term leases to have their lease expire and negotiate a lower rent; this reduction will come through the average rent numbers over the next year or so.
     
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  9. fl360

    fl360 Well-Known Member

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    there is another way governments can pay for it.... as such... look at the gold prices...
     
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  10. NHG

    NHG Well-Known Member

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    I've renegotiated rents 20-50% less, some contracts were still current.
    This is across the board in a lot of major suburbs in Sydney.
    Minimum 6 month reductions, some 24 months.

    Rent free periods are not out of the question, as is offering well below asking price.

    The government has just released 'subsidies' which essentially means several thousand rooms rent free across the board. This will likely create another vacuum, taking more renters away from the market.

    Just my 2 cents.
    From a guy one the ground.
     
    Last edited: 3rd Aug, 2020
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  11. MTR

    MTR Well-Known Member

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    Ouch
    We saw 25% drop in rents in Perth when mining boom went into free fall In 2007 it took some time for rents to recover, its a killer
    Vacancy rates will also increase When there is oversupply
     
  12. MTR

    MTR Well-Known Member

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    I agree apartments are more vulnerable
    However, if supply outstrips demand for houses you will see further drops Here too, its early days

    2021.... will be interesting
     
  13. MTR

    MTR Well-Known Member

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    Does anyone know why this is happening? Its simply too much supply coming to market, due to -

    more short term holiday accommodation coming to market

    Drop off of migration

    Change in circumstances due to coronavirus
     
  14. Zimplestiltskin

    Zimplestiltskin Well-Known Member

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    - renters have been given the go ahead to ask for lower rent to existing contracts. Many people without hardship are taking advantage.

    - people who have been laid off the most are typically renting because they have lower paying jobs near expensive areas (think hospitality, service industries).

    - young people are moving back to parents home to save money and be safer from sharehouses.

    - less students and migrants.

    - new supply of Airbnb and short term coming on to long term market.

    - inner city and nightlife districts are dead, no need to pay high rents to live there.
     
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  15. Spiralkut

    Spiralkut Well-Known Member

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    Just raised my rent from 380 to 400 last week.
     
  16. Robbo80

    Robbo80 Well-Known Member

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    Yeap its bad and no longer centralised to the cbd areas. Data yet to show revised asking prices, albeit some asking rents are still a bit wonky, i.e. include a helfty discount for first couple of weeks then back to pre-covid levels.

    So if you are landlord now with an empty rental prop, are you better off leaving it empty rather than run the risk of taking on dodgey tenants who cause wear and tear on the property and could take you for a ride (due to the govt not allowing evictions at present). For those that choose this avenue they may just do a token listing just to enable tax deductibility as holding costs after tax are extremely low right now.

    Thinking long term, this drop in income is not only concentrated to landlords but experienced in all old economy industries now. So how much weight should be put on 1-2 years of supressed incomes in terms of valuing an asset if we intend on holding for 30-40 years?. Also could this happen? - further bad news = future stimulus = more violent the rebound when things resolve.

    Or perhaps is this the 'new normal'?
     
  17. Ace in the Hole

    Ace in the Hole Well-Known Member

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    We've got 11 townhouses 5km Southside of Brisbane CBD and was expecting a drop as they continually come off lease.
    Was expecting to get hit pretty hard by negotiations to drop rents but surprisingly the agent says there was strong demand at recent opens and one currently leased for $515/week was listed for $530 and even more surprisingly $550 was offered to secure the property, they have a dog which is fine with us.
    Another property available at the same time, this one is bigger, stayed the same at $570.

    Maybe it was just lucky this time but was really expecting to get hit quite hard.
    So far so good.
     
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  18. wylie

    wylie Moderator Staff Member

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    We've just had tenants renew at the same rental amount in Balmoral $550 per week (stand alone house). I was prepared to drop if they pushed for that, just to keep them, but no issues at the same rent.
     
    Last edited: 3rd Aug, 2020
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  19. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

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    In my opinion, to say that units are down and houses are flat is true, but insufficient.

    I would like to see the vacancy rate by number of bedrooms. Because my guess is that during the boom we build a lot of 1 and 2 bedders, and not enough 3 bedders. Ie we built the wrong things.

    In my experience, my three bedder rents are flat or better, and my two bedder rents are down slightly.

    The extra bedroom - this is the key, my friends.
     
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  20. djyella

    djyella Well-Known Member

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    Looks like Syd and Melb down, Bris and a few other capitals up.

    SQM Research - Property

    Happy to only own in Brisbane for once.
     
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