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From: Colin Mills
Just thought I'd rain on everybodys parade (all this talk about prices booming is starting to get boring anyway) but I just re-let a couple of my places down in Sydney(units on lower North Shore) Leases were $550 p.w. last year. Today (drum roll) $450 p.w.! Ok so its only beer money but it must prove something! To top it off one was empty for 8 weeks! Longest vacancy (by about 11 weeks from memory) in 14 years. The agents tell me the "old boy" working in the property management office has never seen anything like it in 20 odd years.
Evidently Sydney vacancy rates are starting to nudge 4%. Now lets put all this together. Increasing vacancy rates coupled with falling rents (20% in 12 months) and what does it mean? Based on past experience it means one thing - falling prices! Based on my places I would suggest prices are way out of whack for the rental return. The current return as a percentage of price is less than what I was getting in the late 80s! And we all know what happened in the early 90s.
Just thought I'd rain on everybodys parade (all this talk about prices booming is starting to get boring anyway) but I just re-let a couple of my places down in Sydney(units on lower North Shore) Leases were $550 p.w. last year. Today (drum roll) $450 p.w.! Ok so its only beer money but it must prove something! To top it off one was empty for 8 weeks! Longest vacancy (by about 11 weeks from memory) in 14 years. The agents tell me the "old boy" working in the property management office has never seen anything like it in 20 odd years.
Evidently Sydney vacancy rates are starting to nudge 4%. Now lets put all this together. Increasing vacancy rates coupled with falling rents (20% in 12 months) and what does it mean? Based on past experience it means one thing - falling prices! Based on my places I would suggest prices are way out of whack for the rental return. The current return as a percentage of price is less than what I was getting in the late 80s! And we all know what happened in the early 90s.
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