Rents dropping

Absolutely Redwing,

I think in WA we are seeing general rents rising by 5 or 6%…about time too. Tenants have had it far too low for far too long.

Personally, I’m negotiating jumps ranging from 12% up to 60% on past leasing levels that were woefully inadequate.

Corporate profits are up, especially in resource based businesses, and they don’t mind a bit securing properties with higher rent levels.

It’s all good from my end. Thank God I don’t own anything in the Eastern States.

Cheers,

Darryl Moore

“No point having a cake if you can’t eat it.”

Rents always drop in winter and go up 10%-15% in summer. It’s the old storey of supply and demand.

Our agency http://www.rentingmelbourne.com.au has about the same number of properties to lease all year round, yet enquiries are far fewer in winter and properties sit vacant for longer.

So to lease them Pam, my wife and director of the comany, suggests her clients drop their rents. A $5 per week drop in rental boosts enquiries from the internet quite noticably and places get leased.

Contrast that to January and February when there are many more tenants looking for accomodation. If for every property you have available for lease, there are 2 or 3 serious rental applications, its really easy to increase rentals by 5% or 10%.

This pattern happens every year.

Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.au

Hi Clones,

I assumed that you were asking if its time to sell (Is time to sell?) because of a decrease in rental returns.

Current IP’s are the IP’s that investors own now.

(Don’t the tenants change overtime and you need to find new ones?) Yes, but some of my tenants have been there for between 15-20 Yrs.

(if they find a place across the road in the same condition and 5% or 10% less rent, well my friend I think you can figure out where they are moving to!.) I’m not sure about this one either, moving doesn’t just involve walking across the road either. How many things do they have to change for that 5-10%, electricity, postal, driving licence, insurances. I think most people wouldn’t move across the road to save somewhere between $20-$50/ month. Also, how often do you find places that similar to each other unless there in the same complex. Most of my IPs have something that makes them a little unique/different to other surrounding properties and my PMs never have a problem finding new tenants. To the best of my memory the longest any of my IPs has been vacant is less than 14 days.

Nevertheless there will always be some people like you say that will take the 5-10% cheaper property.

C2

Rich in happiness and money is better than rich in money with no happiness.

Being strongly influenced by the university our local rental market is at it’s strongest in Feb and at it’s weakest about now.

I don’t feel too much concern. I doubt the sky is falling.

Did you read this article Clones? Perhaps there is some hope on the horizon for us poor property investors [blink]

HIA Media Release “Sydney Faces Rent Crisis”
12 October 2005

SYDNEY FACES RENT CRISIS

Sydney councils have been urged to speed up approvals for new apartments
as Sydney is caught in the grip of a looming rental crisis.

New research by Australia’s Peak Building Industry Group, HIA, reveals that
within the next 18 months, Sydney will quite literally run out of vacant rental
stock.

HIA’s NSW Executive Director Wayne Gersbach said that with Sydney rents
already increasing faster than inflation, urgent and immediate action must be
taken to get apartment and medium density projects into the construction
pipeline rather than being locked up in councils at the approval stage.

“While the merry-go-round of arguments relating to planning, zoning, and
sustainability continue, the unstoppable force of housing demand will further
drive up rents and squeeze modest and low income earners,” Mr Gersbach
said.

“Sydney’s supply of rental dwellings increased by only 14,500 in 2004/05,
down 13 per cent on the previous year and sending the rental vacancy rate
plunging from 3.6 to 2.5 per cent,” he added.

“With rental investment lending in NSW still down some 40 per cent on 2 years
ago, and with 14 consecutive months of sub-2000 new unit approvals, it is hard
to see us adding more than 10,000 new properties to the rental stock over the
next year.”

At this rate, the Sydney rental vacancy rate will plunge to zero by Christmas
next year.”

“Clearly this pressure will drive up rents, affecting savings and consumer
spending at a time when the NSW economy is already spluttering. More
importantly however is the negative impact it will have on housing affordability,
as those rental households who aspire to home ownership see their savings
eroded,” Mr Gersbach said.

“With an estimated 4,200 flats, units and apartments stuck in Sydney local
councils at present, some of which have been waiting final approval for over
two years, urgent and immediate action must be taken to not only get them
signed off, but to minimise the additional conditions and sustainability
requirements that typically add tens of thousands of dollars to the final price of
each unit.”

Website: http://economics.hia.asn.au

Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985

Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.

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Dear Darryl,

1. Just to confirm what you are saying, I’ve just increased one of WA IPs rental from A$240 per week to $260 per week in July 2005. My third IP is presently being rented out at $280 per week since Sep 2005 and I will be targetting to put my 4th IP for $300-$320 per week in 2006 once it is completed..

2. So , in a way, we can say that the rental rate is rsiing to catch up with its Eastern States’ counterparts.

3. for your kind update, please.

4. Thank you.

regards,
Kenneth KOH

If you have subscribed to the daily property email mentioned on this site, you would have read read this morning that rents have increased and are tipped to increase more in Sydney, Melbourne and Brisbane. I tried to put the quote in this post, but it is all too hard for my Monday brain. I have just increased our rent by $10 per week (still a tad under market I suspect) with no complaint at all from the tenant. I suspect he is also reading about the rent increases over the past months in Brisbane and perhaps thinking we could have increased it more. He is paying slightly under market but we have long term tenants who are no hassle at all and look after the place like home. He has locked in for a further twelve months and, therefore, both he and I are happy.

My thoughts, Wylie.