Rent will not go up forever

[sash]

Rents are already flatlining in the better suburbs of Sydney.....where you pay about $500pw for a reasonable 2brm flat. With the economy as it is people are being more careful with their money...including rent.

The rents in areas like Bankstown, Blacktown, and Liverpool are still rising...but I suspect these areas also have limits....my guess is rents will slow once 2 brm units go for $300pw.

 

[sash]

I am a immigrant.....but I ain't going anywhere....what will my properties do without me!

Some migrants will return to their countries...particularly where the GFC is not as pronounced. But can't see people from UK, NZ, Canada, Europe, or USA returning back in droves! It is better over here from a employment perspective.

i think you migth underestimate the staying power of those skilled migrants.
It seriously takes a LOT of time, effort, and also costs to migrate to australia.... so unless they were faced with total bankrupcy, I doubt skilled migrants will be returning to their home countries if they merely lose their job.

Migrants dont move here on the promise of work. They move here cos this is an awesome country full of opportunities that otherwise dont exist in their home country. Many give up EVERYTHING to come here.

 

[nonrecourse]

Think outside the square

When times are tough you need to think laterally in order to continue to obtain above market returns on your investment. If you have chosen your location well initially, have purchased in an area where people are conservative, have a better standard of living, your property is a cut above the rest and you continue to add value, then your rents will go up forever.

 

[agent007]

If the govt turn off the tap on immigration, which I hope they dont, then 'undersupply' will cease to exist IMHO.

If the tap is turned off, that will reduce the aggregate demand for products an services which is what the government is trying to avoid. If the aggregate demand curve shift to the left, the aggregate supply will shift too reducing the GDP for sure. If that scenario prevails for some time (immigration tap off), inflation will rise well above the desire range and we all will lose.

 

[alexgsz]

Alex

given the extent of the supply at present, are you seeing asking rents FALL or are they just trending sidewards? There will be exceptions but by and large?

Regards

Anecdotely I'd say they are falling. I can't say I have been monitoring them though so I don't have hard facts to back this up.
However I do have a couple of real world examples.

I recently moved from a 1bedder to a 2bedder that was about 5 years older than my previous place. The rent should have been about £50 a week more, however I got it for the same as my previous rent.

Good mate of mine moved from his 1bedder close to canary wharf (the banking district) closer to the city. This should have cost him an extra £30-£80 a week, but again he got it for the same price. Basically an upgrade in property for no additional cost.

Lots of bargaining to be had when going for a rental review as there are so many places about you can really get some good deals

 

[Highlygeared]

Let's hope in Oz / cap cities, rents will still rise. Unemployment is spiking up but hasn't got out of control (yet), and interest rates are falling rapidly - but countered slightly by tighter lending conditions and lack of new supply of rental stock etc.

Extremely difficult to predict where rents are heading over the next 24 months for these reasons but if I had to take a guess, I'd say flat to falling. As said, hope I'm wrong.

 

[thedon]

I've been averaging 15% rent increase on my rentals in last 6 months. Still not a lot on the market when I check on realestate.com.au either so I can't see them dropping down anytime soon.

This of course depends on the area and the investment condition!

 

[IndexFund]

Supply vs demand. unless off course you people like to sleep on the street.

 

[Piston Broke]

Supply vs demand. unless off course you people like to sleep on the street.

It aint that simple.
There may be plenty people looking for houses to rent, but all unemployed.
Supply must meet what demand is able to pay, or Demand must be able to pay the amount Supply is asking.

So what are the factors that determine how much Demand is able to pay?
And if it cant pay what Supply is asking, then who is under most pressure to meet the others conditions first?

 

[sparky23]

I recently increased one rent from $320 to $350 per week, another is scheduled next month to go from $300 to $350 and we have 3 groups looking at a property which just became vacant tomorrow where the rent is being increased from $365 to $395, this is across 2 states.

However if interest rates fall as much as predicted people will realise that mortgage payments will cost them less than rent - say mortgage payments had been $3,000 on a $400,000 loan and rates drop to 4.5 then $1500 or $375 per week suddenly makes buying very attractive!

That will make for interesting times methinks!

 

[chilliaa]

I think this article has crunched the myth that rent will keep going up in bad time.

http://www.bloomberg.com/apps/news?pid=20601213&sid=aI.M_5CqhbCY&refer=home

The key here is the housing formation pattern change will affect the demand for housing significantly. There is no reason why this cannot happen in Australia imho.

I just love these sought of articles, they just present more opportunties for me.
Stop trying to identify near point economic situations and just stand back,
do you see average salaries increasing over the next 10yrs, 20yrs, 30yrs?
if the answer is yes then rents will rise.