will rents go down?

[seank]

Hi all,
I follow the notion, that someone who holds property won't sell unless they're forced too. With the latest interest rate cuts and more coming, most who have held property over several years would be seeing their IP/s coming back to neutral/CF+ , providing rents don't drop, therefore no forced sales.
Which comes my question, with supply side still tight, will rents drop and if so WHY?

 

[boomtown]

I have seen advertised drops around 5% in inner Brisbane which frankly surprised me. PMs say it is "very quiet". Maybe its seasonal. Maybe its not. But inner Brisbane rents went up 20% last year so maybe its just evening out. I dunno. Wont be able to tell until Jan / Feb which are traditionally strong months.

 

[marg4000]

Rents can fall.

If this recession really bites, more people will share, downsize, move in with family etc. Then, with less demand, rents will fall as landlords reduce their asking price to get a tenant.

It happened in the "1990s recession we had to have". Without reductions, rentals could stand empty for weeks or months. There were also offers of "first one/two weeks free" in an effort to attract a tenant.

I am seeing far more "for rent" signs outside houses, and they are staying there for longer, than approx 6-12 months ago.
Marg

 

[boomtown]

I bet Gen Y are bunkering down and not moving out of their parents house right now - they are afraid of losing their jobs and being stuck with a lease.

 

[urchin]

i have already seen a few listings saying "must sell or will rent". i dont really understand the psychology behind those listings (why should i care if they end up renting it?)

but i do think it means lower rents. that is, people moving trying to unload houses wont be able to get the prices they want. so they decide to rent and wait. and wait, and wait, and wait. but the relevant point is that, since they cant sell they have to rent or eat a whole loss.

so yeah, rent will drop. i think. but what the hell do i know?

 

[Trogdor]

i have already seen a few listings saying "must sell or will rent". i dont really understand the psychology behind those listings (why should i care if they end up renting it?)

but i do think it means lower rents. that is, people moving trying to unload houses wont be able to get the prices they want. so they decide to rent and wait. and wait, and wait, and wait. but the relevant point is that, since they cant sell they have to rent or eat a whole loss.

so yeah, rent will drop. i think. but what the hell do i know?

Dont they need to live somewhere whilst they rent it?

Surely cheaper stock will be supported at the expense of more expensive stock!??

 

[urchin]

Dont they need to live somewhere whilst they rent it?

Surely cheaper stock will be supported at the expense of more expensive stock!??

i dont quite understand the bit about cheap vs. expensive (some will be upgrading, others downgrading, others just relocating).

but, assuming that most people are not just flippers and have bought their property 5+ years ago (before the bubble got out of control) they should have built up considerable equity in the house. accordingly they should be able to draw on that equity for a loan for the new house, renting the old house till they can get a price they deem "fair".

having said that, i think most people remain on a bubble mentality where 10% CG YoY is considered normal and where any decline in housing prices is considered highly abnormal and short term. eventually this sentiment will be forced to change and vendor prices will rationalise, but till then i do think a lot of unsold properties will go into the rental market and put downward pressure on rents.

 

[The Red Baron]

I bet Gen Y are bunkering down and not moving out of their parents house right now - they are afraid of losing their jobs and being stuck with a lease.

Very true, I can admit i'm in that situation.

I'm 25 and at home paying $50 board a week and good location right near transport.

Can allow me to save an extra $500 a week. Otherwise i'd be paying $300 a week rent somewhere and only have $200 a week after expenses. Huge difference to me.

Also have a 20hr a week second job which is enough to cover my loan repayments incase I lose my fulltime job.

All in preparation for a long drawn out downturn.

 

[tomd]

"having said that" aaarrggghhhh!!

Doesn't anyone say "however" anymore, or "on the other hand"?

Having said that (hang on, I'm important, change that to "that said") no offence!

tomd

 

[urchin]

"having said that" aaarrggghhhh!!

Doesn't anyone say "however" anymore, or "on the other hand"?

Having said that (hang on, I'm important, change that to "that said") no offence!

tomd

you feeling ok tom? i don't see how "having said that" is different from "on the other hand", perhaps you would care to enlighten? in fact the former is only 4 syllables whereas the latter is 5. if you want to break it down into letters, they are equal... i don't really see your point.

perhaps people enjoy mixing it up a little every once in a while. the occasional "heretofore" "whatsoever" "insofar as" livens things up a bit. relax mate.

having said that, literarily, i still kick your ***

 

[angela]

I just dropped rent on an IP $20 week to secure a tenant.
No interest at the higher rate, drop the rent and I have 3 applications in 3 days.

 

[yadreamin]

I,ve just re-let an ip we had a heap of applicants, BUT the pm said it was only because our ip rent was at the lower end of the scale. We still get market rent but anything under $300pw is getting snapped up very quickly. The higher rentals are sitting for a lot longer and are offering all sorts of incentives.
cheers
yadreamin