Mega Thread Rental market where you are? (Plus housing and the homeless)

[Chief]

Reading today that the Sydney rental market is a horror show right now.

Why hasn't negative gearing fixed this? It is supposed to encourage supply of rental housing, isn't it?

What is the rental market like where you are?

 

[Madas]

Rental market has always been really bad we we are but at the moment it’s almost non existent

We live in a holiday town and the rise of AirBB over the past 10 years and the Covid influx has soaked up everything

WA government has requested EOI from builders across WA to become part of a social and affordable housing cooperative panel

Can’t see it improving any time soon


Negative gearing should never have been allowed on existing properties
It’s not too late to change it , might just get some speculators interested.

The new rental laws might put some prospective and existing landlords off though , there is a theory that some may exit the market , I don’t buy it .
Demand for rentals will remain strong for years IMO

 

[Gethelred]

Rental market's okay, but the problem is the cost of everything else. Used to be, I paid 740 a month for a room in an apartment, bills paid (including internet) in a street opposite Monash in Clayton, and I'd be able to feed myself and pay for petrol with $100 per week. Now, I'm paying the same amount for rent, but petrol's at $100 a week (driving, if anything, less than I was at the time and with a more economic car) and food is a bit pricier.

 

[Father Jack]

I have a friend in Launceston who has just had his rent upped by $30 a week, he doesn't want to pay that much but looking at what's available there for about what he's paying now I reckon he'll have no choice.

 

[caveman72]

Rentals are hard to get way too many empty houses are being used for Air BnB. One of my mates has 6/7 on his street alone

 

[Reynolds Number]

I know a father of 5 kids and wife who are now paying $150/night for AirBnB in Perth because they can't find a place. His boss has decided to look after the dog and has gotten all workers to chip in money to help him and his family out.

Pretty messed up time for some.

 

[Evolved1]

For property investors, interest rate rises need to be offset by rent increases. Surely you don't expect investors to take the full hit?

 

[Evolved1]

I know a father of 5 kids and wife who are now paying $150/night for AirBnB in Perth because they can't find a place. His boss has decided to look after the dog and has gotten all workers to chip in money to help him and his family out.

Pretty messed up time for some.

Geez, that's rough. There's a lot of competition for rentals in some areas which makes it difficult for low income earners, those with no rental history, young people, etc.

 

[FIGJAM]

For property investors, interest rate rises need to be offset by rent increases. Surely you don't expect investors to take the full hit?

What does it matter what the investor wants? The market dictates the rents!

Fortunately for investors though, rising interest rates pulls prospective buyers out of the purchasing market into the rental market, thus driving rents up, which is exactly what's happening.

 

[Evolved1]

What does it matter what the investor wants? The market dictates the rents!

Fortunately for investors though, rising interest rates pulls prospective buyers out of the purchasing market into the rental market, thus driving rents up, which is exactly what's happening.

Interest rates dictate rent. It's not a matter of "wants".

 

[Nuggs Bunny]

Interest rates dictate rent. It's not a matter of "wants".

To a degree. If interest rates push your mortgage payment up by $20 a week and you want to push that on to the tenant the question is why weren't you charging them the extra $20 already if the tenant has shown they were willing and able to pay it. To me the rental returns are what they are, the interest rate just changes the viability of the property.

It will also be difficult for most landlords to raise the rent enough to offset all of the rate rises as they come. I'd expect most will find it will take three or four years to raise the rent enough to cover interest rate rises without running afoul of tenancy protection laws.

 

[Ghost Patrol]

For property investors, interest rate rises need to be offset by rent increases. Surely you don't expect investors to take the full hit?

Did they lower the rent when interest rates went down?

 

[Evolved1]

To a degree. If interest rates push your mortgage payment up by $20 a week and you want to push that on to the tenant the question is why weren't you charging them the extra $20 already if the tenant has shown they were willing and able to pay it. To me the rental returns are what they are, the interest rate just changes the viability of the property.

It will also be difficult for most landlords to raise the rent enough to offset all of the rate rises as they come. I'd expect most will find it will take three or four years to raise the rent enough to cover interest rate rises without running afoul of tenancy protection laws.

You'll find the vast majority of mum and dad property investors aren't looking to extract the maximum amount of blood from their tenants. They're generally happy to take unders if the tenant looks after the property, isn't demanding, and pays on time.

Interest rate movements are a game changer, in that they increase costs for the landlord. Those costs need to be offset by increased income which typically comes from rent.

That's where you'll find landlords looking to take that extra $20 per week, and where 'market forces' shift rental prices up.

You raise a good point that it may take years to bring rent increases in step with interest rate rises. I'm just glad to be out of that game for now.

 

[Evolved1]

Did they lower the rent when interest rates went down?

Doubtful.

Tenants were given extreme leniency in rent payments over the past couple years. Does that count?

 

[QuietB]

Interest rates and rent have zero correlation.

 

[Nuggs Bunny]

You'll find the vast majority of mum and dad property investors aren't looking to extract the maximum amount of blood from their tenants. They're generally happy to take unders if the tenant looks after the property, isn't demanding, and pays on time.

Interest rate movements are a game changer, in that they increase costs for the landlord. Those costs need to be offset by increased income which typically comes from rent.

That's where you'll find landlords looking to take that extra $20 per week, and where 'market forces' shift rental prices up.

You raise a good point that it may take years to bring rent increases in step with interest rate rises. I'm just glad to be out of that game for now.

I'd go as far to say most mum and dad investors aren't even involved in researching and setting the rents charged because they go through a property manager who is already 100% invested in getting the most out of the property. I'd like to know where your assertion that most landlords are driven by altruism comes from because it is not something I've seen as a tenant or a landlord myself.

Anyway, property is not as simple as a cafe selling lattes that would raise the price of a cup everytime the price of milk goes up. Some landlords are heavily leveraged and will be hurting from small changes in interest rates, others will be working with a smaller loan and some will own outright. While every cafe is affected equally by an increase in the price of milk, the same is not true for interest rates and landlords. For some areas with low supply I'd imagine most properties will have raised rents, for other areas with a good amount of properties available investors will need to balance rent raises against keeping their property occupied. Some who neagtively gear probably won't even move rents at all. This is the risk inherent with property investment and there will be a lot of amateur investors with terrible properties that will do it tough over the next few years.

 

[The Dice Man]

This is an interesting podcast on what is happening in the USA, and coming soon to your town, if it hasn't already.

Banks Are Buying Your Neighborhood, Part I - Stuff They Don't Want You To Know | iHeart

<p>Across the United States, would-be homebuyers are telling a similar story: after weeks or months of searching, they finally find a home they can afford -- only to be outbid by another buyer, often offering to pay in cash, at thousands of dollars above the asking price. What's going on...

www.iheart.com

Basically corporations are buying up properties targeting a particular demographic, namely those people who are just able to afford a niceish house/appartment in a niceish area. They're buying up those properties thereby pricing out those on the cusp, and forcing them to rent because they want to live in an ok area with good schools ect. But remember, 2030, you will own nothing and be happy.

The AirBnb element isn't discussed here, but I think it's also relevant. We own a couple of properties in Nice and Cannes and rent them out on AirBnb. One of the mortgages is paid off early next year(7 Year Loan), whilst the other is earning 220% PA of the yearly mortgage(20 years) repayments. If we were to have an all year tenant it would cover around 110%. Effectively AirBnb's in popular destinations price out locals and I wouldn't be surprised if it backfires eventually leading to stale, boring tourist areas with no local warmth or heart, especially if there is no real industry to the town.

We don't rent out our apartments year round because we make twice as much AirBnbing, and we are not a charity in this great, grand ponzi called capitalism.

 

[FIGJAM]

Interest rates dictate rent. It's not a matter of "wants".

No, what the market is prepared to pay dictates rent.

If there was a sudden exodus of people from an area, like say what happened in 2020/21 with student-driven high-density areas over pandemic, then it wouldn't matter which way the interest rates were going, as the rents would plummet and landlords would take what they can get, or go without rent.

As I've said, rents will usually track interest rates rising as they usually get potential buyers in as renters. And vice versa.

 

[Reynolds Number]

Geez, that's rough. There's a lot of competition for rentals in some areas which makes it difficult for low income earners, those with no rental history, young people, etc.

Perth is dreadful right now. Quite a few horror stories around.

Increased cases of adults moving back with parents including those with spouse and kids.

 

[Carn The Berries]

Perth is dreadful right now. Quite a few horror stories around.

Increased cases of adults moving back with parents including those with spouse and kids.

Not the first time its happened in Perth in (reasonably) recent memory. In 2012 vacancy was at something like 1.5%, rents were increasing rapidly (I got stung $75 per week after the first year - was the catalyst for a move) and most agents were only having opens on weekdays because the demand was so strong (why open up on a Saturday morning, when you know you'll get 20 people through at 2pm on Wednesday anyway? LOL).

 

[Gethelred]

Doubtful.

Tenants were given extreme leniency in rent payments over the past couple years. Does that count?

I wasn't.

 

[Rich]

Heard multiple cases of 2 bedroom apartments in inner Sydney (in good areas) going from around 700-750 a week to 900-950 once leases are up. Some of leases were a good deal due to Covid but its an insane increase.

 

[Number37]

Price elasticity of demand is as close to zero as it will ever get.
It's not just housing, it is almost everything.
The population is getting price gouged on an industrial scale.
"We have supply issues" so we have to put up prices by 25-100%. Load of BS.
Woolworths promises not to increase the price of everyday items until at least the end of the year...not long after they increased the price of EVERY everyday item by 25% on average....they are robbing you in broad daylight, like all the other businesses 'doing it tough'.

 

[Madas]

Price elasticity of demand is as close to zero as it will ever get.
It's not just housing, it is almost everything.
The population is getting price gouged on an industrial scale.
"We have supply issues" so we have to put up prices by 25-100%. Load of BS.
Woolworths promises not to increase the price of everyday items until at least the end of the year...not long after they increased the price of EVERY everyday item by 25% on average....they are robbing you in broad daylight, like all the other businesses 'doing it tough'.

Agree
Society is getting royally rorted on every front
It’s criminal

And the explanations are pathetic :

Oh the war in Ukraine
Shipping container costs
Railway line washed away
Not enough rain
Too much rain

Piss off

There’s a minority of the population pulling the strings and becoming ridiculously wealthy in the process

 

[QuietB]

Price elasticity of demand is as close to zero as it will ever get.
It's not just housing, it is almost everything.
The population is getting price gouged on an industrial scale.
"We have supply issues" so we have to put up prices by 25-100%. Load of BS.
Woolworths promises not to increase the price of everyday items until at least the end of the year...not long after they increased the price of EVERY everyday item by 25% on average....they are robbing you in broad daylight, like all the other businesses 'doing it tough'.

There was a potato farmer on the radio the other day saying they were putting their price up 30c from a base of 20c a kilo - these were commercial potatoes but whatever.

My issue is if the farmer is selling them for 20c a kilo why am I paying $7.50 a kilo at Woolies?