Will rents catch up with incomes?

[Peter Parker]

Some interesting gaphs on the Melbourne property market.

http://www.civilpandemonium.com/post.php?postid=1339

The first shows low vacancy rates.

The second shows that rents have risen slower than average incomes (and construction costs) since 2001.

To show similar growth to income, rents would need to rise by 20%, and there are signs of a rapid rise in the last year.

Peter

 

[alexlee]

Since the price of a particular property can rise faster than wages because it 'becomes' more desirable as it 'shifts' relatively closer to the CBD, wouldn't we also expect rents for a particular property to rise faster than wages?
Alex

 

[dave99]

This depends on a constant entry of new cheaper properties to support the move of existing properties to a dearer segment. It's a bit like a pyramid scheme, but if people continue to buy into it, the pyramid continues...