Any opinions on the huge boom in people investing in IP’s? I wonder if there will be enough people renting to fill these houses. In my area, which has been listed by Sydney Morning Herald as being the area predicted to experience the highest capital growth over the next 12 months, there is a large number of houses, as never been seen before in this area, with ‘for lease’ signs which sit there for up to 4-6 months.
Any thoughts on oversupply of rental properties in Australia?
[?]Hi There
I tend to agree with your comments. I have had my house up for lease in the Melbourne in the CBD for the past 8 months with hardly any enquiries. It is an excellent property and it is hard to believe that there have been hardly any enquiries in 8 months.Rickie
I have an apartment in Melbourne CBD that I listed for rent at $340 pw, however realising that there are too many properties competing for tenants, I reduced the rent to $285 pw and it was snapped within a fortnight.
In my opinion, if you work out the numbers on leaving a property vacant for months or reducing the rent by up to 30%…the odds are that reduced rent with quick occupancy will almost always work out better than prolonged vacant proerty with higher rent.I live in a new estate in Maribyrnong (inner NW Melb) and the amount of vacant townhouses is unbelievable. The properties have never been lived in, they’re really well fit out (3 storey, balconies, spas, Blanco kitchens, polished floors etc) the rent is cheap and there is about a 30% vacancy. We were offered 2 weeks free rent, an entertainment package & whitegoods to sign a lease. We’ve been here 4 months and still don’t have neighbours!
The problem may get worse too. There are several other really big estates in the area being developed – Lake Side (Kensington/Maidston), Niddrie quary, River Side, Kensington Banks and along the river further there’s also a heap of activity going on between Maribyrnong & Brimbank.
Good for tenants, hate to be holding onto one of the properties though. I believe Henry Kaye developed a lot of this area – so chances are the investors paid an inflated price too [
].Cheers, Leigh
“If you can count your money, you don’t have a billion dollars”
J. Paul GettyInteresting reading, I am glad we sold our apartments, townhouses in maribyrnong when we did.
So far so good with our rental properties, but pitched at the 200-230 range, outer east.
A huge note of caution here!
The upper middle end of the market is saturated.
All the more reason to pitch at the lower end of the market, where there is huge demand for cheap affordable accomodation.
I think the lack of rental demand will start to have significant impact on new developement, resale and investment.
We are subdividing our large blocks of land and will probably slowly start to offload those properties, once the cap gain is made.
I believe rental demand is still high in Qld, but may start to head the vic/nsw way, as investors start pouring in from the south.
there will not be many good pockets left.sorry to hear of your difficulties
us who buy at the lower end of the market in country centers often cop a hard time from people you are Sydey and Melbourne centric, but demand is really strong. i don’t have any of my 20 properties vacant. they are in the latrobe valley, hamilton, stawell, horsham etc. Rental demand at the cheaper end is still strong but i hear the top price end (eg $200+ a week) in places like Horsham is very quiet.
westanI guess it’s all cyclical. When the share market bounces back big time, investors will surge towards that. We just need the world to settle down a bit in terms of global stability.
Hi all,
Welcome back Westan,sounds like a very fruitful trip to NZ.I was pretty busy down your way while you were away.Bought in Ararat and Portland.
Checking out regional areas has been a real eye opener plus a lot of fun as you get to have a holiday while working.
I agree with the sentiments being expressed in this thread.Lots more investors around now while less renters.The rising market of the last few years made it easy for just about anybody to buy investment ip”s and make a profit.
So I reckon the next few years are going to sort the men/women from the boys/girls in the investment market.The deals are still there, but it will take a lot more diciplined and buisiness like approach to investing to not get your fingers burnt.The Melbourne apartment market is a classic example of the herd mentality at work, even when the warning signs have been so obvious for so long.Just watch the smart investors sit back for a while and then start to buy up at all the fire sales that are sure to start in the next couple of years.
On that cheery note, bye
Joffhi joff
congrads on ararat and portland, i especially like portland but don’t have any props there. stuffed around last year trying to get a $41k home $2k cheaper when someone else bought it. 12 months later it would sell for $85k.
Anyway i agree with your comments. i also think there are so many new investors in the market when they start having tenant issues, and hastles they will sell. i expect in the next few years many will give up on property this could give us another opportunity to buy below todays prices
westanhi joff
congrads on ararat and portland, i especially like portland but don’t have any props there. stuffed around last year trying to get a $41k home $2k cheaper when someone else bought it. 12 months later it would sell for $85k.
Anyway i agree with your comments. i also think there are so many new investors in the market when they start having tenant issues, and hastles they will sell. i expect in the next few years many will give up on property this could give us another opportunity to buy below todays prices
westanWestan,
Yep,Portland has got a lot going for it.I don’t mind admitting I probally paid a little too much for the prop there,as there has been a fair bit of action and prices have moved up sharply, but I am comfortable with my hold stratergy.Vacancy rates are extremely low and rents are quite high.
Methinks you have been quietly sitting on a little known investors paradise in the western districts for last few years and I think there is still some value to be had.
JoffHi Joff
sorry banner i’m right off the topic here but joff can i ask what did you pay and what rental should you get? i haven’t looked at portland for quite a while but prices keep going up and there is not much available to buy. i was talking to a guy on Sat night who lives in portland he moved recently and loves the place. i’ve mentioned to you some of the exciting things that may happen in the portland area haven’t i?
westanWestan,
I bought a 3 bedroom in Barkly st for 105k returning 155pw already tenated. Fairly average return I know,but this area, in my opinion has great potential.The whole place is really vibrant with plenty of work.There is quite a lot of housing development going on,in fact one agent I spoke at length with said that values have risen as much in the surrounding hamlets as people move out of town for a quieter life!!.
Check out a place called Narrawong, east of Portland.There is an up market housing development happening on the beach there that looks really good.If I lived in the area I would definately buy in to this.
I have just made an offer on a prop in Heywood I looked at when down there and am looking at this one as a bit of a specci on capital growth, hoping some Portlands buzz will filter down.Maybe, maybe not.It has a great return so any thing will be a bonus.
Joff
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