Rent rises for new tenants

[Lawry]

Article from today's The Age newspaper...

..anyone have IPs in these areas/ do the stats relate to your experience? we have an IP in Chippendale, tenant vacating, rent increasing by 10.25%

Rent rises for new tenants
July 31, 2011 - 8:24AM
AAP

Demand for rental properties remains high in inner city suburbs across Australia, a real estate group says.

The Sydney suburbs of Glebe, Randwick, and Potts Point all recorded rent rises of at least 11 per cent for new tenants, compared with this time last year, RUN Property says.

Average weekly rent across the city was $534, with properties under $600 in Darlinghurst, in the inner city, "renting like hot cakes" Run Property CEO Rob Farmer said in a statement on Sunday.

The highest performing suburb in Australia was Sydney's Neutral Bay, where rents for new tenancies jumped by more than 12 per cent, compared with this time last year.

"Many tenants were "staying put" because research continued to show that rent increases are greatest when tenants move out and the property is advertised for lease, Mr Farmer said.

In Melbourne, the suburbs of Armadale, Glen Iris and Kew were star performers, where rents increased by at least 10 per cent, followed by Fitzroy, Essendon, Fairfield, Brunswick and Moonee Ponds, which recorded rent rises of nine per cent or more.

In Brisbane, Nundah recorded the greatest rent increase of 5.9 per cent, followed by Clayfield, St Lucia and Logan Central, which all had increases of at least five per cent.

The figures only relate to new tenancies.

 

[mech81]

I've got an IP in Brunswick..Havent seen that sort of increases.

 

[tdh78au]

I've got an IP in Essendon; and haven't seen that sort of increase. Infact the tenant is vacating end of Aug and PM adivses we may have to lower the rent due to high vacancies in the area

 

[our obsession]

Rents continue to creep up- areas of regional Victoria, (well presented rental properties continue to be a scarcity), 10 to 20% last 12 months in most of mine. I would say my IP's are not dearest to rent, nor the cheapest, somewhere in between.....

 

[Pom]

I've got 3 studio flats in Glebe.

1 still rented to good sitting tenant with 5% increase this year
1 new tenant which represented a 10% increase.
1 new tenant which represented nil increase.

Average of 5% increase. It depends on when your vacancy hits the market and who is around at that time. I usually advertise at a higher rate for the first say 2 weeks and then drop it back if there isn't any interest rather than keep it vacant for any period of time - false economy.

 

[sydsider]

Did some search for my 2 bedroom Ultimo apartment when the lease was up for renewal two months ago. I would say the average asking rent was up by at least $50 compared to a year ago and the vacancy rate was definitely low. Keep in mind though a new apartment block was recently completely on Wattle St and the asking rent is noticeably higher there probably due to the higher purchasing cost.

 

[Blackie Dobson]

In my experience those rates of rental appreciation seem a bit light.
The owner of the Toorak appt where I live has put the rent up 21% in the last 12 months, 10% the year before and 7% the year before that. The owner has not spent a cent on the property since I started leasing it 5 years ago.

Similarly I have increased the rent on my investment property Hawthorn East by 13% in the last 12 months and 10% the year before that.

 

[Investor78]

My townhouse in the Logan area has gone up 5% in 2 years. There is some talk that rents are increasing in the Brisbane area due to the large displacement of people because of the Jan floods, so maybe my next turnover of tenants might show a higher increase of rent.

Living in sydney though and being a renter, it sucks. I rented a 1 BR apartment for the last 4 years and my rent went up annually. Altogether it would be around a 30% increase over the 4 year period (from $290/week to $370/week). So I would say that is average 7%/year increase.

This was in the suburb of Erskineville in an apartment complex containing 12 buildings and 100's of apartments, so you would not think supply would be an issue.

Darren.

 

[virgo]

Rents up

Hiya

It's the supply issue mate!

check the vacancy rates; that will tell you something; all my IPs in Sydney are in areas with vacancy rate of 1% ...

 

[Peter_Tersteeg]

I've got an IP in Brunswick..Havent seen that sort of increases.

I put my Brunswick property up by about 15% a few months ago. If the tenant moved out, I'd be looking for about another 15% more for the next one.

 

[tdh78au]

The owner of the Toorak appt where I live has put the rent up 21% in the last 12 months, 10% the year before and 7% the year before that. The owner has not spent a cent on the property since I started leasing it 5 years ago.

Similarly I have increased the rent on my investment property Hawthorn East by 13% in the last 12 months and 10% the year before that.

I put my Brunswick property up by about 15% a few months ago. If the tenant moved out, I'd be looking for about another 15% more for the next one.

These are pretty good numbers. Assume the rent was below market value to start with? Also any rent assessment issues? (http://www.consumer.vic.gov.au/CA25...ent+and+other+payments~&3=040-Rent+increases~)

 

[Ed Barton]

spruiking by one agent. ignore it.

 

[mech81]

I put my Brunswick property up by about 15% a few months ago. If the tenant moved out, I'd be looking for about another 15% more for the next one.

Hmm will probably increase rent at the start if next year. Is yours a unit/villa or house PT bear?

 

[jclegg]

We raised the rent at our Ringwood unit 12% and then 10% the last two rises but it was way under market when we bought.

 

[Giddyup]

Article from today's The Age newspaper...

..anyone have IPs in these areas/ do the stats relate to your experience? we have an IP in Chippendale, tenant vacating, rent increasing by 10.25%

Rent rises for new tenants
July 31, 2011 - 8:24AM
AAP

And as an antidote to articles written by people that have a vested interested in propping up the market, here's an article that is based on real data.

"With home values down in all capital cities but Sydney over the past 12-months, the consensus view has shifted from an expectation of solid capital growth to expecting a prolonged period of price stagnation whereby incomes will slowly catch-up with home values.

However, the price stagnation meme has created a headache for the property industry. With prices now expected to flat line and rental yields well below both mortgage interest rates and term deposit rates, there is reduced incentive for first-home buyers (FHBs) and investors to enter the housing market."

Therefore, in order to re-ignite buyer interest (and maintain home values), the property industry has created the illusion that the rental market is tightening and rents are about to rise sharply.

http://www.macrobusiness.com.au/2011/08/more-rent-hysteria/

 

[VYBerlinaV8]

My units in ACT would all jump at least 10% in rent if new tenants were installed.

 

[Icarus]

Just had the agent call asking whether I'd be happy with a rent rise from $240pw to $300. It's only for a 3 mth period, but not complainng!

Flow on effects from Gladstone, a construction company rented 7 units in the complex.

 

[Peter_Tersteeg]

Hmm will probably increase rent at the start if next year. Is yours a unit/villa or house PT bear?

It's somewhere between a unit and a townhouse on a small block of 5 in a fairly good location. It's a little hard to classify.

It's been below market rent but the tenants have been there for a long time and they're very reliable. Even today it's still below market rent and everyone knows it.

The tenants did give us notice a few years ago. 2 weeks later they came back and asked if they could stay. I figured they looked around, realised they're getting a good deal and decided to stay.

I usually charge market rent for a new tenant, then only put it up in increments to keep it a bit below the market price. If they were bad tenants, I'd be putting it up more to encourage them to leave.

 

[russellpeter]

I am finding that my rental properties are holding steady will little increases of $5 to $10 increases from 12 months ago

But I am one of the few agents in the area that treat my re lets more like sale properties with professional photos and a decent script and I doing private inspections and OFI at least twice a week on vacant properties.

I just looked at my numbers for last month and I took over 18 properties 10 tenanted and 8 either vacant or about to become vacant.

The 10 tenanted properties I have increased the owners net returns by $21.47pw over the 10 properties

And the 8 vacant ones 3 are still for rent and have re let the other 5 with an increase return of $55pw

how? decent marketing and a fair management fee. You would be amazed at how many owners I get that say. they can’t find a tenant for their property only for me to show then there ad like the ones below.

http://www.realestate.com.au/property-apartment-qld-highgate+hill-405319525
http://www.realestate.com.au/property-house-qld-annerley-405329536
http://www.realestate.com.au/property-house-qld-moorooka-405306483

So rents are going up but I think more agents are getting with the times and getting their act together.

 

[Lawry]

interesting responses, thanks, seems there are pockets of up, down and sideways, as there probably always are..

@Icarus, whilst my original question was about the article - which focused mainly on inner city suburbs - we also have an IP in Gladstone, and rent is going up there by $120 pw this month, so its another, albeit regional, pocket of high rent growth.

the new thread on the forum today about 'do rents ever go down significantly' http://www.somersoft.com/forums/showthread.php?t=73105 is a good balance to this thread, a reminder that rents don't always go up everywhere all the time.