rents to rise 50%
- Thread starter seank
- Start date
Hopefully there will be significant increases over the next few years.
I know for inner melb after these rate rises the numbers are starting to look a bit silly for new investment.
e.g. old 60's type unit in the inner SE = $400k+ (say 400k for the sake of argument). On an 80% deposit (pretty big) thats 320k lend, at 9%p.a. thats 28.8k p.a. interest. Rent is not much over $300pw = $15,600 less 7% rental management fee = $14,508. Also say $2k p.a. for rates, body corp, etc... (very low estimate) = so total out of pocket p.a. = approx $16,000 pa out of pocket.
A 50% rental increase would half that. Probably what it would take to get more investment.
I know for inner melb after these rate rises the numbers are starting to look a bit silly for new investment.
e.g. old 60's type unit in the inner SE = $400k+ (say 400k for the sake of argument). On an 80% deposit (pretty big) thats 320k lend, at 9%p.a. thats 28.8k p.a. interest. Rent is not much over $300pw = $15,600 less 7% rental management fee = $14,508. Also say $2k p.a. for rates, body corp, etc... (very low estimate) = so total out of pocket p.a. = approx $16,000 pa out of pocket.
A 50% rental increase would half that. Probably what it would take to get more investment.
I suspect that 50% will be a bit optimistic, but there'll definitely be some good rises over the coming years, especially for well located property. I plan to buy another inner city property later this year.
Go you good thing! Rents going up 50%, prices going up 50%. Methinks property is about to have its day in the sun again soon. Basic demand and supply economics in play.
For those who've read some of my older thoughts, dare I suggest rising rents, coupled with peaking mortgage rates that might even start to fall, should see the "tipping point" reached shortly prefacing the next boom?... Its just a theory remember, but there's no question that people think about the "why should I buy when I can rent so much better cheaper?" If that argument is removed then some will think "OK, time to buy given its approaching parity cost-wise".
Here's a little back reading if you're interested in my dribble...
http://www.somersoft.com/forums/showthread.php?t=24676
Bring it on!!
Cheers,
Michael
VYBerlina,
I just put the rent up on my Mona Vale IP by 20% this year alone. 10% a year for the next three get me to that 50% mark. Definately going to happen for that property I think so its not an unrealistic statement...
Cheers,
Michael
I doubt my one bedroom apartment on the Lower North Shore will increase from $800 per week to $1,200 per week but we will see. What people are forgetting is the other side of the equation. Rising rents will mean a rising need for wage increases which ultimately leads to a rising inflation rate and a rising need for the RBA to increase interest rates. Then affordability still remains the issue as interest rates may well in fact go back to 13-15% if wages increased to such a rate to compensate for such a high increase in rental prices.
I feel that there is currently a serious imbalance of housing demand and supply, demand for affordable housing in decent locations are far outstripping the supply of them. However the barrier to buying is quite high too, with increasing interest rate and credit squeeze. Idealy, if the RBA starts to loosen up and the subprime crisis in the US is over, we could see a boom in properties
Felix,
I agree with that. If the subprime crisis is worked through and credit starts to become more freely available then we could well see the start of increasing property prices. My SMSF is geared up with 30% equity to take advantage of the new super and borrowing rules. With the 9% contribution and some small salary sacrificing i'm planning on buying some resi property towards the end of this year. Leichardt rental market is wild and prices are not too obscence.
I agree with that. If the subprime crisis is worked through and credit starts to become more freely available then we could well see the start of increasing property prices. My SMSF is geared up with 30% equity to take advantage of the new super and borrowing rules. With the 9% contribution and some small salary sacrificing i'm planning on buying some resi property towards the end of this year. Leichardt rental market is wild and prices are not too obscence.
Holy Chr#8@t!! Is $800 what a 1BR apt in Lower North Shore is getting? In that case I don't see why it couldn't go to $1200!
The "affordability" for home buyers is different to the "affordablity" of serious investors. If rents are going up with the interest rates as they have/are right now, it won't make much difference to a good investment when you throw the Capital Growth in.
From what I'm reading in these threads, most of us are still buying.
MichaelWhtye
I'm with you Michael.
Thats a one bedroom apartment on the harbour with views of the Harbour Bridge from the lounge room and bedroom so it is a unique property in that respect. Fully furnished as well for the executive market. Tenants company pays the year in advance which is very nice
Thats a one bedroom apartment on the harbour with views of the Harbour Bridge from the lounge room and bedroom so it is a unique property in that respect. Fully furnished as well for the executive market. Tenants company pays the year in advance which is very nice
Oh wow, very nice. Great Set up well done!
Its 50%, not 400%. Someone got their wires crossed if their spruking quadruple rates on the air...
But I'll settle for 50%.
Cheers,
Michael
Rents I think are still very cheap in some locations. As well as owning properties and living in my PPOR I also rent a unit on the Gold Coast as I spend a couple of nights a week and a few weekends a month there plus school holidays etc. I pay $400 per week rent on this unit in an older highrise complex. If I was to buy the same unit The interest, rates and body corporate fees would exceed $1200 per week. Add maintenance insurance etc. and you're looking at a big loss. If you rent it out in the holiday pool you get a min $1000 a week or $200night for 3 night minimum stay but the landlord here is happy to just let it be a long term rental.
I evaluated buying the unit but given the fact I would only own 1 in a block and CG has been quite good there however there would be little opportunity for me to creat equity through reno's etc. I can use that $800 a week for other investments that can generate a better return.
I evaluated buying the unit but given the fact I would only own 1 in a block and CG has been quite good there however there would be little opportunity for me to creat equity through reno's etc. I can use that $800 a week for other investments that can generate a better return.
I don't see 50% over next 4 years as far fetched in inner Melbourne. Rents are way out of wack at the moment.
There has already been a significant rise over the past year or so and tenants know they have to suck it up as the landlords do interest rate rises. It's not pretty for anyone at the moment but the extra tight demand will put pressure on rents and landlords won't be soft while their holding costs are so high. Gone are the days of "One week rent free"
There has already been a significant rise over the past year or so and tenants know they have to suck it up as the landlords do interest rate rises. It's not pretty for anyone at the moment but the extra tight demand will put pressure on rents and landlords won't be soft while their holding costs are so high. Gone are the days of "One week rent free"
Gone are the days of "One week rent free"
lol! Yes, it's almost at the stage that we can start demanding that tenants pay outgoings like a com prop!! Wouldn't that be fabulous!
Jingo,
You do pay for outgoings on resi property in London.
You do pay for outgoings on resi property in London.
Sorry Goanna...found one earlier this morning:I don't see 50% over next 4 years as far fetched in inner Melbourne. Rents are way out of wack at the moment.
There has already been a significant rise over the past year or so and tenants know they have to suck it up as the landlords do interest rate rises. It's not pretty for anyone at the moment but the extra tight demand will put pressure on rents and landlords won't be soft while their holding costs are so high. Gone are the days of "One week rent free"
2 Bedroom Unit in Lovely Art Deco Building
$240 p.w.
INNISFAIL* Newly polished floors and orig French Doors.
* Choice of 2 units either upstairs or down
* Fully air-con throughout,
* Built-ins to main bedroom
* Secure and newly renovated
* Amazing river views and cool breezes all year round
* 2 mins walk to town
* Undercover parking
* Owner will consider the option of furnishing the units
* Ideal for professional
* $240 per week with 1week rent free.
http://www.realestate.com.au/cgi-bi...r=&cc=&c=50249120&s=qld&snf=rbs&tm=1207348056
There is however, a bit of oversupply in that area at present.
Council rates are paid by the tenant, though. The rates on my 1 1/2 bedder in Kilburn in London was about a grand a year, and that was when I claimed the single person's discount.
Alex
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