Rents rising yet house prices fall is it true?

Renters are being gouged despite the market downturn

andlords continue to increase rents despite the dramatic downturn in the property market.

The hike was experienced in most capital cities across Australia but particularly in Melbourne and Sydney where the fall in the property market’s value has been most pronounced.

 

Can’t say it’s true. For Sydney at least. My PM practically begged me to sign another year contract with no rent increase. Living in inner city. So nah.
A lot of apartments take weeks to rent.

 

Its a supply and demand relationship at the end of the day, if rents rise and a tenant can find better value accommodation elsewhere, then they will eventually move.

As a PM, I'm finding rents clearly falling in some areas of Sydney, particularly to older apartments where there has been a large supply of newer properties hitting the market. Vacancy rate data is showing that there's something like 40% more vacancies over Sydney compared to the same time last year, at some stage this will impact rents - some places more than others.

So it comes to being strategic if you're in a falling market, planning to keep current good tenants eg give them something they've been asking for in exchange for a new fixed term; planning early if there's a vacancy coming up etc

 

Renewed 3 Sydney leases in the past two months- all apartmemts. Two had rent stay flat, the third gal’s a savvy one- dropped rent $20pw after she pointed out a brand new apartment across the road was going for $50 less than mine.

Only newbies and the truly destitute will try a rent hike for suburbs with new apartments coming online.

 

Silly article I think.

They are two separate markets (the market for occupying housing and the market for transacting on housing), which are correlated in the long term but diverge significantly short term.

Short term, rents driven by supply and demand for accommodation to occupy. House prices can obviously be driven by a whole bunch of other factors short term such as the cost and availability of financing ( a key issue atm), investor fervor/bullishness, taxes, etc etc etc.

Rubbish article.

 

And that’s without the fact that rents apparently aren’t moving that much, according to the comments above. Standard news.com.au click-bait I think.

 

Had similar results past 6 months, though had to drop one by $35 pw, one remained the same (mostly built out inner south suburb) and $15 rent drop in another (1000s of new apartments near this one)...

 

Same with Perth

Its all about supply if there is too much supply and not enough takers rents fall

 

Imagine the outcry if rents were directly linked to housing value
Rents in Syd-Melb would have increase 30-50% since 2011
Now there is a drop back to reasonable average house prices and some boffin wants to complain Oh please
Bring back the 80s, when returns were no less than 8%

 

@Stoffo those kind of yields simply do not exist in Residential AU property any more. Well, i caveat that with anything 'worth owning' (i.e. stuff that isnt a nightmare to run; and isnt in the highest of high risk markets...).

Echoing others here.. my Sydney rents have dropped though my regional (non-capital-city) ones have incremented up. Brisbane has remained neutral with all of them re-signing at flat rent rates.

 

That was my point @C-mac
The media bang on about rental prices and affordability
Yet by percentage based on the investment owners % returns, rents are far cheaper than they've ever been.......

 

That is correct....there is now an oversupply of housing in Sydney...but in Perth/Brisbane/Adelaide vacancy rates are headed down.

 

Didn't really like this article or at least some comments such as:

Mr Veyret wants consumer protections enacted in policy to help swing power back to the renter.
Currently, Australians wanting to contest against excessive or unreasonable rent increases must go through a tribunal.
Choice says this should switch; the landlord should be the party forced to go through a tribunal to argue their case for any lifts to rent.
“Say if the landlord hiked up the rent by 10 per cent, we think the onus of proof should shift to the landlord to prove and provide reasoning why they plan to increase,” Mr Veyret told news.com.au.
“Consumers and renters are often left in the dark; they get that letter the rent’s increasing and they have no real reason why.”

Really...
Some reasons:
- land valuations went up, more land tax to pay
- new legislation meant needed to install child locks on windows, or smoke alarms in every room, etc...
- maintenance on air conditioners, smoke alarms, blinds, etc... increases past by suppliers' increase in their costs
- additional repairs needed to be paid
- loan repayment increased by additional funding costs of financiers
- changes in interest cost or refinancing or fees by banks/financiers
- accountant's costs increased in managing compliance

I can go on and on and on.... which business needs to justify any increase, usually we just receive a letter saying and increase with be from such a date because of one reason and so be it! Why should it be different with running a property business?

 

That is changin' in Perth just put up rents $10pw...in Butler first increase on over 2 years...I had to drop rents 20% plus before....

 

Been hearing this, but not effecting my properties, perhaps its very much dependent on suburb

I think it is probably better than it was 2 years ago

 

For anyone that deals with the big retailers , especially Coles and Woolworths , its been that way for years, if you want to increase your prices, you need to show them why, and they want actual figures and numbers to justify why you are increasing the costs of the products that you supply, have the costs of your raw materials gone up ?? , and it does not matter if your a major brand with a very well known product.
They wont accept price rises just because you paid to much for a business and need to make more money or you have borrowed to much money.

 

While I agree with your comparison I would prefer to distinguish between different classes of businesses. Coles and Woolworths are hugeeeeeeee and invest elsewhere as conglomerates, not to mention can offset, enforce, employ specialist expertise.
My property business would be at present classified as small business hence totally different comparison.
The issue for me is that if I am running a business and I am not...somewhat profitable I will become bankrupt or just close my business, I am not government where I can pass the problem to the next government to solve. My small property investing business provides a roof over someone's head, hence this will be left to others to take care off (yes we can centralize the control and I assume some would prefer it, just not little me!).

 

Capping rents/rental growth is a great way to achieve exactly the opposite of what renters want. You would end up with a housing undersupply as investors/developers are unable to earn an economic rental return, and refuse to invest in the sector. Then rents go up, and if they can’t, you end up with black markets, key money (non-refundable deposits), access to good apartments only for the well connected etc etc.

Stupid idea.

 

For most property investors , they are not a business, the ATO does not classify it as a business.
Pretty sure they will not even allow you to claim a loss against income that is totally unrelated , but it can be carried forward.
Very few real businesses can sustain losses week in week out for years at a time, and not really employ anyone at the same time.
The ATO would even look quite closely if you could not make a profit after a few years, and probably class it as a hobby, or suspect it was being used as a criminal enterprise to commit fraud.

 

I agree with you ATO may not classify it as a business, so what are we classified as, perhaps you can assist here working for the ATO (I assume?)? I think investors? I don't know and it is irrelevant to me the actual name....
All I know is that I provide a product, a house, a roof over someone's head. Whether I need my own capital or to finance it I need to adhere to all the rules and regulations, including managing it, looking after it, making sure it is in acceptable and livable condition and so on.
I need to pay the financier (if I have a loan), the insurance company (for the building and landlord cover), the people that manage it (property manager), people that maintain it and repair it (business owners or tradies, photographers, marketing, etc..), accountant (paperwork), OSR (land tax), ATO (if applicable) and so on.
As I said if I will not be profitable or will find it too hard to manage why would I be doing it, why would anyone pursue such a hobby and make no profit or even a loss with all this work, what would I live off? I would need to dispose and close my investing or my holding or whatever it is called.
I have never invested into property for a hobby or to commit a fraud or to sustain losses, initial capital was required as I needed the funds to purchase it. I just compare to a business since some businesses borrow money first to start up their businesses to purchase stock or items requiring to run their business.
I have invested so that I can in some small way try to get ahead, provide also someone with a roof over their head, so that I can be self-reliant in the old age and to get financially ahead.
My family rented privately too as migrants, did consider housing commission at first but instead chose and managed to pay private owner the rent. Luckily for us such opportunity existed then.