Incredible, thats the funniest thing I've seen in ages
Now if only I can do that for my boatbuilding skills
Dave
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I'm sure that three month sample in Kirribilli was pretty small. And as for one bedder rents in Botany Bay jumping by 42.9%, that's just bizarre. Is Botany Bay even a suburb? I know Botany is a suburb. And there is certainly a bay down there. Maybe there is a new apartment building that has gone up and they have invented a suburb called Botany Bay that encompasses the immediate vicinity of that building - developers do that. There would be some one bedders in the building, and when they hit the rental pool vs the few older exisiting one bedder, hey presto, rents are up 42.9%. So the nonsense swings both ways.
No,its me who has to apologize to you. If I caused you any upset I am deeply sorry and want to thank for continuing to share your logic and points of view with us. For that I salute you.
http://www.themessagegroup.com.au/l...le=20081208-Urchin-from Somersoft_create.html
That is laugh out loud funny! It was me arguing that the number of tenants was the same! Michael Whyte finally realised he'd misunderstood me, and now you're pretending that was your position all along. How cute! You're not fooling anyone, but let's pretend you are.Nobody said Michael was wrong , even you admited that overall the number of tenants remains the same.
Really - that mess is how you put things simply? It's not exactly easy to read is it? And then you didn't even answer my question, and if anything you disproved your initial statement on the topic!!! And as I'm sure you've forgetten what your old opinion was since you changed it, here it is:Just so you don't misunderstand lets put it in nice simple numbers so that even an economist would understand. Lets say there are 300 tenants overall and from that number 100 tenants are renting at $250/week 100 at $500/week and 100 at $1000/week. Forget about the $250/week ones since at best they can't downgrade, if anything they'd be hit with a rent increases. If 50 tenants from the $1000/week decide to downgrade there are now 150 tenants competing for only 100 places in the $500/week market and a vacancy of 50 places in the $1000/week market. Half of the investors with $1000/week empty rentals now decide to cut the rent to $500/week while the other half decide that since it makes little difference to their bottom line they will wait it out until they find tenants or keep the place empty. The number of $500 a week places have increased by 25 and there are now 150 tenants competing for 125 rentals, which still leave 25 tenants on the side of the road. There is no reason for the $500/week investor to cut rents to $250/week but there is an incentive for the $500/week tenant to pay up extra to secure a place. At the end of the day rents on some of the $1000/week are coming down but the $500/week places are going up and overall the median rental price is moving upwards. Did you follow all that ?
Tumbling rent prices ? More like wishful thinking.
And here we have your example with 25 landlords out of 50 dropping their rents! Truly awesome. So what I posted in reply before WAS right:Do you REALLY think that someone with a $1000/week rental property will drop rents just so they can rent it out even at the risk of renting to what you boys call bogans or worse - a family of dole bludging crack heads who will stop paying rent after the first month ?
See? The $500/week landlords now have 50 extra potential tenants that used to be paying $1,000/week. Thanks for agreeing with me, but the bit about pretending that's what you meant all along is frankly weird.The, um "better quality" tenants are still there, they're just not renting the $800-$1k/week places - so the $500/week landlords get better tenants - they don't evaporate. Unless you're aware of some factor that means they either don't exist or are now classed by you as dole bludging crackheads. Ask Michael Whyte - he'll explain to you in bull-English.
*sigh* Here's the snippet in the OP article that's relevant:If it is so clear why not highlight it and clear the confusion ?It's pretty clear to me where the $20 drops are starting from reading the OP, and your selected text from it. Isn't it clear to you?
No penny dropping? Here the clue you gave yourself:An agent at Deborah Richardson Real Estate, Stacey Rohan, said properties on the lower North Shore which used to be rented in one weekend, were now staying on the market for an average of three weeks, with landlords forced to drop rents by at least $20 a week to attract tenants. "It's probably a lot cheaper than it has been."
No light bulbs? Gasps of recognition? Slap of the thigh and knowing nod of the head? I gave you a clue, and italicised (google it ) the meaningful bit before, but I've put it in bold this time incase that helps:Prices there start around $300/week for a little dog box and go above $5000/week
landlords forced to drop rents by at least $20 a week to attract tenants
the meaningful bit before, but I've put it in bold this time incase that helps:
...
And yet, here we are with:
- same number of tenants (which I posted, but doesn't fit your initial post);
- a higher class of renter at the $500/week level (which I posted, that you disagreed with); and
- landlords at the $800-$1,000/week dropping their rents (which I posted, and you spectacularly proved in your example after initially denying).
And I won't even go into the scenario I raised before where there isn't an abundant supply of would be tenants - it's confused you into using an example where there's as many tenants as properties to try and disprove it. Michael Whyte (and most others) get it so I'll leave it there.
No, they'll drop their rents (as they are doing) to get tenants, increasing competition at the midrange level. Now landlords of the "$500" places are competiting for renter attention with better quality places in the same price bracket. So unless there's an abundant supply of potential tenants then the "old" $500/week landlords get to make the decision on whether to keep the place empty at that price, or drop their rate to remain competitive.
Supply & demand my man.
If ever you were contemplating trading up on your PPOR then now is a good time to do so as the gap between lower and middle is closing as is middle and upper properties. More so for the latter.
Buying discounted top end properties in a cyclical downturn is a pretty good strategy IMHO.
Buy that heavily discounted "dreamhouse" in Pittwater for under $2M as an IP. Wait 5 years then flog my existing PPOR and move into the dreamhouse.
Hi DadOfSam,
Yep, and that was the exact point I was making in my original post in this thread. i.e. A drop in rents at the top end in no way changes the number of tennant families in the market and in no way changes the number of properties for rent. All it does is move the price point at the top end a bit.
Your original post was easily mis-construed as arguing a reduction in the number of tennants looking for a place to rent. You said:
It sounded like you were making this argument:
1. Top end landlords will drop rents: "No, they'll drop their rents (as they are doing) to get tenants, increasing competition at the midrange level"
2. This will create more competition at the mid-range: "Now landlords of the "$500" places are competiting for renter attention with better quality places in the same price bracket"
3. But this won't result in rents holding up as there isn't abundant tennants at that price point: "So unless there's an abundant supply of potential tenants then the "old" $500/week landlords get to make the decision on whether to keep the place empty at that price, or drop their rate to remain competitive"
My point was that there IS abundant tennants at that price point due to the increased competition from previous top end tennants. I made the point that total tennants in the market doesn't change and all it does is move competition down a touch. In fact, that would probably lift the rents at the mid-range as the increased demand here increases competition. More tennants seeking rentals at the mid-range price point and less at the top-end price point. Your argument about a cascading drop in rents was flawed. The top end rents come off and the mid lifts a bit and the bottom stays largely unaffected by it all.
Rents at the top end are more a factor of "want"-ing that place to rent due to the esteem need it fulfills. At that price point it ceases being a "basic" good and becomes an "esteem" good in economics 1.01. These types of goods have different demand elasticity characteristics. Basic goods will tend to hold their price more as this is a "need" not a "want". Hence, expect the lower end rents to hold up stronger or even rise a bit as everyone needs a roof over their head. Its the top end stuff that will suffer a bit in the current market in terms of both rent and capital values. Did I say that out loud? But this is all just typical market cycle stuff as we come off an unprecedented boom and enter a cyclical downturn.
If ever you were contemplating trading up on your PPOR then now is a good time to do so as the gap between lower and middle is closing as is middle and upper properties. More so for the latter. And remember, just as the "esteem" goods suffer the most in a cyclical downturn, they also benefit the most in a cyclical upturn as everyone moves up Maslow's Hierarchy of Needs and looks for that dream house that will impress their friends and colleagues. Buying discounted top end properties in a cyclical downturn is a pretty good strategy IMHO. I'm contemplating this right now but on a 12 month horizon. Looking to develop Mona Vale, improve my cash flow and equity position, then buy that heavily discounted "dreamhouse" in Pittwater for under $2M as an IP. Wait 5 years then flog my existing PPOR and move into the dreamhouse...
Cheers,
Michael
Good point, I'll shut up now...I thought you ended this on a whatever? Not that it matters, but since's its important to you...
SMH said:Jody Savage is only 19 but with historically low interest rates and a first homebuyers grant doubled to $14,000, she is convinced now is the time to buy in the southwest.
SMH said:RP Data's research analyst Cameron Kusher said it was a telling sign that the most substantial falls were in the city's most expensive market.
"This further supports evidence which suggests that the global financial crisis has significantly harmed the traditional safe haven areas such as the Eastern Suburbs, due largely to forced sales and few buyers currently within the most expensive Sydney markets," he said.
That is laugh out loud funny! It was me arguing that the number of tenants was the same! Michael Whyte finally realised he'd misunderstood me, and now you're pretending that was your position all along. How cute! You're not fooling anyone, but let's pretend you are.
So how did you go answering my question "How did the number of would be tenants (especially the non-bogan ones) decrease in the example market where tenants who used to pay $800-1k/week rent now want to pay $500/week?"
So after you simplified it there are now 25 renters without a roof, more people competing for the same number of properties but the average rent is going to fall while the median will remain the same. Must be nice living on your planet.Well, in your example we have:
- 50 less $1,000 renters;
- 25 more $500 renters; and
- 25 renters without a roof.
(See how much easier that is to read?) Which means:
- No decrease in the total number of potential tenants (which we all agree on now);
- Price pressure at the $500/week level (as I posted before);
- A $125/week fall in the average rent (in case you were wondering); and
- An unchanged median rent.
I tried to keep it simple just for you as I've noticed you are easily confused. (early signs of heat stress ? lol )And I won't even go into the scenario I raised before where there isn't an abundant supply of would be tenants - it's confused you into using an example where there's as many tenants as properties to try and disprove it.
*sigh* Here's the snippet in the OP article that's relevant:
No penny dropping? Here the clue you gave yourself:
No light bulbs? Gasps of recognition? Slap of the thigh and knowing nod of the head? I gave you a clue, and italicised (google it ) the meaningful bit before, but I've put it in bold this time incase that helps:
No wonder the D&Gers are sweating profusely under their bear suits and some have even began to display signs of heat stress. It looks like this summer its going to get even hotter under that suit with the property market is starting to warm up.
Yes it is funny, Its funny how you rearranged the posts to suit yourself. Since you have difficulty following posts or at least pretend to do so I lined them up for you to keep it simple.
post 36, DOS - So unless there's an abundant supply of potential tenants then the "old" $500/week landlords get to make the decision on whether to keep the place empty at that price, or drop their rate to remain competitive.
post 37, Michael - Close, but not quite...There is actually no net change in the number of people renting versus the number of properties for rent. All that has changed is that a portion of the people renting the top end stuff now don't want to pay that much and this causes the top end rents to ease.
post 40, DOS - Assuming there's an abundant supply of would be tenants.
post 41, Yorke - Do you REALLY think that someone with a $1000/week rental property will drop rents just so they can rent it out even at the risk of renting to what you boys call bogans or worse - a family of dole bludging crack heads who will stop paying rent after the first month ? They may not be happy to keep expensive rentals empty but it beats having the tenants trash it out.
Still, dreaming of hard-up landlords who one day will rent you a penthouse for $300/week doesn't cost anything so no harm in doing it
post 42, DOS - Umm mate, there's still the same number of the different types of potential tenants. How does the total number of would be tenants get reduced?
Up to post 40 you were still questioning the abundant supplies of tenants then in post 42 you suddenly admitted the number of tenants would remained the same and to cover it up you made up a BS claim about something I never said. I've asked you over and over to show me where did I say that the number of tenants got reduced but instead you misquoted my posts and accused me of not answering you. The quote from post 41 is right above, go ahead and point out where I said that. Well ?
Perhaps it was just your attempt to distract anyone from making comments on the the first paragraph of the story ?
"Rents on apartments across the lower North Shore and eastern suburbs are tumbling as the finance sector sheds jobs, existing renters reach breaking point and lower interest rates make buying a property more attractive."
Despite years of waiting the huge price falls didn't eventuate,the rents went through the roof, the rates did not go into double digits but instead started falling, the FHOG got doubled/tripled and now the only remaining thing left for bears is the old "renting is cheaper then buying" but that is also disappearing fast. No wonder the D&Gers are sweating profusely under their bear suits and some have even began to display signs of heat stress. It looks like this summer its going to get even hotter under that suit with the property market is starting to warm up.
So after you simplified it there are now 25 renters without a roof, more people competing for the same number of properties but the average rent is going to fall while the median will remain the same. Must be nice living on your planet.
I tried to keep it simple just for you as I've noticed you are easily confused. (early signs of heat stress ? lol )
Thank you for not going into that scenario. It may start to conflict with the total number of tenants remaining the same and it took almost 100 posts just to agree that we've agreed on that. LOL
And as a goodwill gesture I won't go into the OS workers returning home or migrants moving here and increasing the pressure on the existing supply of rentals scenario or the scenario where a reduction in building approvals (because its cheaper to buy an established house as well as because of the banks tightening lending criteria) could put pressure on the rental pool in the near future.
Just as I said before, you are very easily confused. Thanks for putting it in bold letters but no that was NOT the question I asked. I asked you to show me where in the article did it mention what type of property and from what price range did the $20+ came in. Was it apartments, houses, penthouses or across the board ? After all a $50 drop in $5000/week rentals is "at least $20" but hardly rents tumbling. It was not mentioned in the OP report so your clues and hints were pointless. If only you had the power to go over other people's original posts and edit them at will you could have added that bit and made your point. Perhaps even removing the offending bits you didn't like or "combine" the posts with another thread to make the problem go away.
I'm still waiting for your anecdotes about your property investments and I'm dieing to hear them but it looks like I'll be dieing of old age before that happens. Perhaps you could share with us an anecdote about how you went to see your landlord and threatened to move out if he didn't give you a $125/week rent cut . ( since on your planet thats the average rent cut)
This thread is getting a bit long and the posts repetitive and pointless so I think I'll leave it at that for now. Because its X-mas I'll even let you have the last word.
cheers
I agree. Based on the information presented so far it's seems a bit desperate to say 'rents are tumbling across inner Sydney'.
Come on mate, unless your are paying $1000 a week or more in rent the chance of a rent cut is somewhere between zero and zilch. I think you missed the main message in that article,Don't pull a muscle reaching so far mate! I wouldn't see why you'd actually think Jessica Irvine was desperate, especially when she lead the campaign for "rents thru the roof" early last year. Don't throw her under the bus because her new tune (for that day) doesn't meet your approval.
existing renters reach breaking point and lower interest rates make buying a property more attractive