Canberra Rental Market - Is it Trending Down

Discussion in 'Property Market Economics' started by Aristos, 22nd Jul, 2013.

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  1. Aristos

    Aristos Member

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    Hi Forumites,

    I had a call on Friday from my Property manager, who informed me that my tenant was making noises about moving on from my 4 bedroom IP in Nicholls as they had noticed they could get the same for much less.
    I noted my surprise that I'd not noticed a significant drop in the house rental market and queried whether the tenant would remain if we dropped the rent and what would likely to be accepted.

    The PM suggested the tenant had in mind a drop in the range of 60-30 from a low 600's rate. I concluded the call telling the PM I'd research and discuss further.

    I've had a cursory look around to discover that whilst units are being talked down in Canberra, houses don't appear to have suffered the same fate.

    Any opinions as to the state of the housing rental market in the north of Canberra?

    Regards,

    Jack
     
  2. geoffw

    geoffw Untitled

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    I have two cottages in Lyneham. The rent has gone down slightly over several years. There is a very big new supply, especially high rises and especially around Belconnen.

    This site shows that average house rents have gone down 7.8% for the year. That site enables you to research by suburb.
     
  3. Jamie M

    Jamie M Mortgage Broker - Oz Wide

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    I recently rented out a house in Calwell and a unit in Qbn without too much difficulty.

    The abundance of units coming on the market will impact supply - but I'm not sure how relevant that would be for a house out in Nicholls.

    I've got a townhouse in Nicholls and keep an eye on the market. There does seem to be quite a few rentals available - and some have been on the market for a while.

    Are they good tenants?

    Cheers

    Jamie
     
  4. Dave_R

    Dave_R Member

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    There does seem to be a lot more stock coming onto the market in the Gungahlin area, and it isn't just units. I have a house in Ngunnawal, and I'm worried about my chances of renting it, even with a reduction, when the current tenant vacates (which I expect to occur very soon). Allhomes has far more properties listed in the suburb than it ever had in the past, and this trend seems, albeit to a lesser extent, to be replicated in neighbouring suburbs.

    If it was me, and your tenants are good, then I'd keep them on with a reduced rate. It is more certainty for you to have someone in there than potentially lose weeks of rent while the place is vacant. But have another chat to your PM and ask them what they think is best, as they'll be in the best position to give you advice on the current state of the market.
     
  5. Nemo30

    Nemo30 Member

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    I have 2 properties in West Belconnen.

    I have noticed a lot of rental properties coming on to the market and staying there despite price drops. In the couple of years I've had them, currently seeing the highest vacancy level.

    I think the market for my properties (3br and 4br houses) - $440 and $550 have dropped by $20 - $30 since the beginning of the year.
     
  6. luckyone

    luckyone 2 down 8 to go.

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    We dropped our rent for our place in Bonner earlier this year from $585 per week to $570 to keep our tenant. There were other places going for a bit less, but it saved them the hassle of moving again. And saved us from getting new tenants.
     
  7. Aristos

    Aristos Member

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    Market Awareness

    Hi All,

    Many thanks for taking the time to reply with your views, advice and links.
    I clearly need to hone my focus on what the market is doing so I can better prepare myself.

    All the best to you.
     
  8. wylie

    wylie Member

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    Is the PM suggesting you drop from a low $600 weekly rate by somewhere between $30 to $60 per week?

    If so, and bearing in mind what has been said here that seems to support that your tenants may leave and rent elsewhere, why not offer $30 per week drop and see if they accept.

    That suggestion from the PM seems an awfully large "range" and I'd start out low, but I agree that you will lose a lot if it is empty for several weeks whilst trying to find a replacement, and then possibly having to drop more than $30 per week to get someone in.

    Your sitting tenant will not want the hassle and expense of moving and might accept the offer.
     
  9. one world

    one world Banned

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    In addition to more stock coming on the market, there is a genuine fear that a Coalition electoral victory will result in a massive downsizing of the public service (remember 1996 anybody?) which will put downward pressure on both rentals in general and house prices in particular.

    Of course if Rudd wins (and he is putting up a masterful fight) then its business as usual and you can ignore the above.
     
  10. 13andcounting

    13andcounting Member

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    What do you think the chances are of a correction in house prices in Canberra? If I recall correctly (having not sold out at the time) post-1996 prices were hit far harder that statistics would lead one to believe.
     
  11. geoffw

    geoffw Untitled

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    I don't know the stats. I had an impression it wasn't as bad as the early 80s- I think the economy became a little more diversified after that.
     
  12. Nemo30

    Nemo30 Member

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    I'm not too concerned.

    Properties are selling quite quickly at good prices at the moment. People don't seem to be holding off until after the election.

    If prices do drop, its not particularly going to affect me as I'm not looking to sell and have a good buffer. If anything will be a good time to buy.

    It all goes around in circles - people lose their jobs (with big payouts) and then in a few years there are more people than there were to start with.
     
  13. Jamie M

    Jamie M Mortgage Broker - Oz Wide

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    I'm not holding my breath.

    There's always talk of APS job cuts and subsequent property price drops.

    A lot of people are "waiting" for the election before they jump in. This could cause a spike in buying activity and prices going into this summer, especially if rates drop again.

    Cheers

    Jamie
     
  14. 13andcounting

    13andcounting Member

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  15. cimbom

    cimbom Member

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    I think that's probably the only reason we were finally able to buy something after all these months :p
     
  16. 13andcounting

    13andcounting Member

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    We're thinking about paying down some of our (more recent) mortgages now - our Canberra house has had some nice growth over the many years we've owned it and may be the best to put on the market given decreasing likelihood of capital gains over the next ten years.
     
  17. geoffw

    geoffw Untitled

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    Real estate has always been cyclical- during some periods the dips have been more severe than in other areas. But overall the growth has been positive.

    While this doesn't guarantee growth in the future, I'd suggest that growth in a ten year cycle is more likely to be positive than negative.

    I'd be guessing that rent exceeds repayments at this stage- even if the rent drops in te short term.

    So I'd be suggesting, if you are looking at a ten year frame, you should be keeping it.

    The chance of being able to buy somewhere else with better growth will be offset to some extent by transaction costs and CGT.
     
  18. 13andcounting

    13andcounting Member

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    The Canberra exposure is subsidising some of the others to be honest - those public servants have always paid a bit over and above what you'd expect they could afford on rent (thems my taxes that are being spent so wisely)! More about reducing exposure as we get closer to bundying off for the last time - all the eggs in one basket blah blah blah.
     
  19. VYBerlinaV8

    VYBerlinaV8 Member

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    I tend to agree. I'm hearing quite a few people talking about waiting until the 'big drop' happens. This to me says that there's a floor of demand under the current prices.
     
  20. 13andcounting

    13andcounting Member

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    Always brings up the same question though, when will they decide that the "big drop" is over and dip their toe in the water? Canberra is a funny place, any talk of cuts in the APS and the locals cry blue murder like it's the end of the world.

    I put a call through to the PM today. She's working with one of the agents to arrange an appraisal for some stage in the next week - will be interesting to see if it meets expectation.