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LOOK at the market. It ain't exactly full of buyers knocking each other over to get to a deal
Agreed.... that's what's happening in the commercial market ATM. NO-ONE is buying distressed properties because they KNOW the liquidators will be selling at fire sale prices within 3 months.If there property is going to sit there unsold while they're distressed , they'll get more distressed.
Sure..... however the OP IS experiencing significant rent rises. Many commentators are expecting a further 1%-1.5% IR fall within 6-9 months. Not going to make much IP c/f +ve, but it will tip some into ownership.Problem is we might not get "significant IR falls" and "excessive relative rent rises"(great use of adjectives by the way) real soon. It takes a long time for that to play out.
Those 2 paragraphs don't add up. Are you saying it's currently cheap to rent (good value) or that rent's can't rise any more because they are to expensive ?Rents can only rise as fast as people can pay for them......
It's still great value to rent (circa 5% pa of property value) ....
Sure..... however the OP IS experiencing significant rent rises. Many commentators are expecting a further 1%-1.5% IR fall within 6-9 months. Not going to make much IP c/f +ve, but it will tip some into ownership.
Those 2 paragraphs don't add up. Are you saying it's currently cheap to rent (good value) or that rent's can't rise any more because they are to expensive ?
Recent OOs can afford to pay 10%pa (P&I & expenses), why shouldn't renters be able to afford it too ? The answer is always 'but I can afford to rent better for less'. Which comes back to the issue of discretionary spending - renters are choosing to 'fritter away' their discretionary $$ on shelter, rather than rent a house they could probably afford to pay P&I on, while they direct their discretionary spending towards a deposit (or invest in shares).
So another way of putting it is that a house/shelter is a mandatory expense, but a 'nice' house/shelter is a discretionary expense.
OP = Original Poster ... in this case, eastside who in post#32 saidSorry, whats OP?
we went from paying $450 a week in one house ....... We are now paying $750 per week, for exactly the same suburb and exacty the same number of bedrooms. ......... last time I searched, the cheapest house available was $950 per week
Check my previous posts (all 2 of them) - you'll find no references to the eating habits of renters. Not sure what point you're attempting to make. I did suggest that renters of flash places could better direct their discretionary spending towards a deposit on a PPOR or other investment, while renting a cheap dump.Are you saying they can afford home ownership if they ate baked beans on toast every night?
The rise in rents is constrained by peoples ability to pay for it so will still be good value for quite a while yet.
OP = Original Poster ... in this case, eastside who in post#32 said
His post prompted my great use of adjectives when I used the phrase "excessive relative rent rises".
Check my previous posts (all 2 of them) - you'll find no references to the eating habits of renters. Not sure what point you're attempting to make. I did suggest that renters of flash places could better direct their discretionary spending towards a deposit on a PPOR or other investment, while renting a cheap dump.
This is not quite correct. Rent rises are all about supply and demand. With inadequate supply and rising population you get rent increases. If people can't afford to pay they have to move somewhere else which, while it does moderate demand it doesn't stop the trend towards rich people renting in the area instead of poor people. Resulting competition among richer people keeps driving rent rates up.
People need to live somewhere and if they need to be in Sydney for employment or other reasons then you may well see these rent rises as just the beginning. If you can't afford it you will have to move to make way for the people who can (and that can include higher density living options). An unfortunate fact of life in a market economy when construction stalls.
Ability to pay impacts on the price of property - agreed because if you don't buy you can always rent and there is a direct reduction in demand, providing rentals are available at a reasonable price. When that changes though...
It just amazes me that some people think rent rises of 100% in ten years are too much? Even if most of that has happened in the last few years. To me that doesn't keep pace anywhere near the replacement cost of housing and ultimately it has too otherwise us investors won't be building anymore!
This is a timely reminder of the traditional reason for buying property - a hedge against rising rents. Our parents were well aware of that advantage and this generation is just starting to feel it now.
Rents will only stop rising if Sydney stops growing or when investors start building again... whenever that may be - could be awhile...
This is not quite correct. Rent rises are all about supply and demand. With inadequate supply and rising population you get rent increases. If people can't afford to pay they have to move somewhere else which, while it does moderate demand it doesn't stop the trend towards rich people renting in the area instead of poor people. Resulting competition among richer people keeps driving rent rates up.
People need to live somewhere and if they need to be in Sydney for employment or other reasons then you may well see these rent rises as just the beginning. If you can't afford it you will have to move to make way for the people who can (and that can include higher density living options). An unfortunate fact of life in a market economy when construction stalls.
Ability to pay impacts on the price of property - agreed because if you don't buy you can always rent and there is a direct reduction in demand, providing rentals are available at a reasonable price. When that changes though...
It just amazes me that some people think rent rises of 100% in ten years are too much? Even if most of that has happened in the last few years. To me that doesn't keep pace anywhere near the replacement cost of housing and ultimately it has too otherwise us investors won't be building anymore!
This is a timely reminder of the traditional reason for buying property - a hedge against rising rents. Our parents were well aware of that advantage and this generation is just starting to feel it now.
Rents will only stop rising if Sydney stops growing or when investors start building again... whenever that may be - could be awhile...
Dont forget that the higher the income level the less people earning at that level. Sort of like a pyramid. Or maybe a bell curve, but you get my point.
So as the income levels rise there are fewer and fewer people therefore less and less demand.
I'd say most wealthy people own rather than rent anyway, but thats a different debate altogether.