Rent rise of 30% in 12 months -any one else having this?

[Keen]

Hi all,

The Rent for my IP in Merriwa, Perth has jumped over 30% in 12 mths.

I originally had it at $150 p/w when my old tennant moved out in Nov 04, increased it to $170 p/w for the new tennant who is now breaking lease, and have now been advised by the P.M. that it should now rent for $195 ($190 - $200p/w P.M. says).

The West Australian paper has twice confirmed the high rent growth rates for Wanneroo North and also Merriwa.

This as you guys know seems a ridiculous rise - $45 in 12mths (I've done nothing to the place). A $5 increase a year perhaps even $10 - but $45!

Anyone else seeing this happen on this sort of scale for a non-improved IP?

If so where and what can we learn from this?

Regards

Keen

 

[quoll]

Seems unusual but not outside the realms of what can happen.

We had two of ours go from $250 to $320 in one hit. But that was a mining town so bit different.

Cheers
quoll

 

[topcropper]

Maybe, with the fly in, fly out in mining, maybe Perth is also a mining town.

The WA economy is really flying. Lets hope it continues. Australia is really riding on the resources boom, as is Perth. Terms of trade is improving, it's all good. Just hope it continues. We will all be in trouble if oil, coal, ion ore gets back to levels at the start of the decade.

See ya's.

 

[Oscar]

Wish I could post a similar thread.

I have been getting increases, but very small. In Leura, from 260/week upto 270/week with new tenants and In Randwick up from 345 to 355/week, again with new tenants. I'll be looking to up a Clovelly apartment from 435 to at least 450/week when the lease expires shortly.

So keen - good on you..

 

[alwayscurious]

I had an increase

from 170 when I bought the place, to 245 now. Happy with that - it's been less than 18 months. The rest of the market is abotu 250 for the same thing. I'll be installing Aircon and bumping the price up 10/week - tenants want this soon before it gets really hot so I'm happy.

I put a fence up, and gardens in and a great PM. It was under rented by about 20/week when I bought it but that's all.

Feel quite fortunate about it but can't claim any brilliant action except for buying it!
Cheers
AC

 

[Roger]

I have a property in Mackay. I bought it 18 months ago and during this time the rent has incresed from $215 p/w to $310 p/w.

Then again I have a property on Katoomba NSW, the rent has stayed the same for the last 3 years.

Cheers,
Roger.

 

[landlubber]

It's always a "moving target". Enjoy it while it happens. Ultimately, supply and demand rules ..... and nature & business abhors a vacuum !!

LL

 

[Brenda Irwin]

It's always a "moving target". Enjoy it while it happens. Ultimately, supply and demand rules ..... and nature & business abhors a vacuum !!

LL

Very nicely put LL.

 

[tigerGT]

I really wish the rental return in sydney increases like this. Most of my friends properties have only gone up 10-20 in the last 3 years. From 230 to 250 in western sydney.
Do people agree with me that rent needs to rise in the capital cities too?

 

[topcropper]

I really wish the rental return in sydney increases like this. Most of my friends properties have only gone up 10-20 in the last 3 years. From 230 to 250 in western sydney.
Do people agree with me that rent needs to rise in the capital cities too?

As Landluber says,

'It's just supply and demand'.

See ya's.

 

[tigerGT]

rent still too low

But if house prices drop as recent news reports have suggested doesnt it mean that demand for rent will also drop since more and more people will afford to buy. What then will ever force the rents up? In metropolitan sydney rents are way too low in comparison to house prices.

Rent should have boomed along with house prices

 

[Andrew]

Au contraire. The housing boom was led by investors, this has caused an
oversupply of rental properties available hence the stagnation of rents.

Rents should be increasing now since less properties are becoming available
for lease.

Rents are unsustainably low, or house prices too high. One or the other will
have to adjust in the longer term.

andy

 

[knightm]

Au contraire. The housing boom was lead by investors, this has caused an
oversupply of rental properties available hence the stagnation of rents.

Rents should be increasing now since less properties are becoming available
for lease.

Rents are unsustainably low, or house prices too high. One or the other will
have to adjust in the longer term.

andy

agree too many units built for investors is what has held yeilds down, but what about the 70% of houses bought as ppor? I think to say " the housing boom was led by investors " is a symplistic view. There were other factors too.

I know of suburbs that are 95% ppor and they still went through the roof from 95-2001 that wasn't led by investors - it was led by demand: people wanted to live there!

But yes a few years of unfavourable developer's conditions means less houses built which means better yeilds. If the developers keep building at or faster than demand then rents will stay low.

 

[Monopoly]

The last property boom was attributed to a combination of :

a) high prices driven by a low-interest rates
b) increased First Home Owner Grant incentives, and
c) a strong demand for investment properties in place of poor performing share markets.

Thus the property market climate at the time, was attractive to BOTH investors and owner-occupiers alike.

 

[Peter Parker]

The last property boom was attributed to a combination of :

a) high prices driven by a low-interest rates
b) increased First Home Owner Grant incentives, and
c) a strong demand for investment properties in place of poor performing share markets.

I'd also add:

d) easier finance
e) low (and falling) unemployment

Also it's interesting the extreme correllation between property slumps and unemployment.

The previous three house price slumps (1974, 1982 and 1990) coincided with a doubling of unemployment (1974: 2 to 4.5%, 1982: 6 to 10%, 1990: 6 to 11%).

Note that as unemployment is a lagging indicator, the house price slump may precede the unemployment rise; for instance the property slump started in 1989-90 but unemployment peaked around 1992-93, keeping the property market weak for several years after that. And when general economic conditions did strengthen, shares got most of the attention.

Lately we've seen property price falls (in some markets only) but time will tell if unemployment will follow, as it did in the previous three cycles.

Peter

 

[ponyfire]

Hi Keen
Has your property also enjoyed considerable CG?
I am wondering if the rent jump is related to the high CG experienced in WA making it more difficult for people to buy a PPOR?
My partner owns a house in Dunsborough, the rent there has increased considerably too, although we have not put it up as much as suggested by the pM because the tenant is a long term goodie.
Cheers
Pony

 

[knightm]

and another...

f) rising wages

 

[tigerGT]

I really dont believe that there is a clear relationship between housing and the Australian Labour market. The only link between the two is perhaps that some suburbs are populated by mostly proffesionals whilst others might have a majority of industrial workers (comapring castle hill to chester hill).

Besides that I do not see a direct link although past data has shown that these two did seem to have a flow on effect from each other in terms of unemployment but this was more likely due to other economic factors such as high interest rates and higher costs. These increased costs would have driven up company costs hence in order to save costs redundancy would follow and the flow on effect from there....

I am not an economist or anything but these are just my views

A quick way for rents to rise is for landlords to have some central national board which advises yearly on the % increase or % decrease.. I prefer rents rise than for house prices to fall...

Anyway peace out

 

[Diane]

We have just had a property in Budgewoi (NSW Central Coast) become vacant and the old rent was $185 pw the new rent $210. Two other properties in Lake Haven renting for $195 pw are now worth $215 - we have just increased by $10 to $205 for existing tenants. At long last rents are moving in the right direction!! Have just upped our South Western Sydney properties (Casula) by $10 for exisiting tenants and another house in the same area has gone from $260 to $300 for a new lease.

Diane

 

[tigerGT]

mixing family with IP???

For me it has not been so good. I started renting my house for 240 a week. After 11 months they moved out and i was left with an empty house. I offered the house to close cousins for $215 a week. Now the cheapest available rent in my area is $250 so im really missing out on lots of income... Well around 1900 a month.....

Now I feel to embaressed to hike up the rent as they are family and I dont want to cause any tensions.... especially as they have a new born as well...

Would you rent out your IP to family for a cheaper price in return for taking extra care of property???

?