Prices have been driven up by investors. The rent it just too damn high. Prices of other essentials have also risen, because the rent is too damn high. Single income families lack a secure home, because the rent is too damn high. Tax breaks for property investors have allowed the market to be ruined, and investors have done the deed. Who will be Australia's Jimmy McMillan?
If you haven't already, I suggest you check him out:
http://www.youtube.com/watch?v=x4o-TeMHys0&feature=player_embeddedI don't even know how to begin to respond to that post.
The rental market is a supply and demand situation. If supply is less than demand the rent price increases.
So if investors were buying lots of properties and then trying to rent them out there would be an over supply of rental properties on the market and the rent charged would decrease.
The increase in rent has been caused by an increase in house prices but the residential rent is not charged as a percentage of the house cost. Only commercial is like that.
If house prices increase and first home buyers can't afford to buy then they rent.
The lack of property investors causes a supply problem for the increased demand for rental properties and the rent increases.
As house prices are high an investor cannot charge rent based on a percentage of the house price.
So a 3 – 4 % rent is most likely achieved before expenses are paid out.
You also have not mentioned the foreign investors that buy Australian Property as an investment and then lock up the property in Australia and do not rent it out.The video is not about the Australian property market but rather the USA
In the USA rents are a lot higher compared to the fact that the prices of houses have fallen.
It is a different market to the Australian market and rental yields are a lot higher.
However it comes back to supply and demand.
As the financial crisis wiped out low income home buyers it created a massive demand for rental properties in the USA.
An investor could have borrowed say 300,000 dollars and buys a USA property. A financial crisis occurs and the property value drops to $200,000
So I would suggest that some USA property investors could have been caught out when property values fell and that their could be a supply problem for rental properties causing rents to remain high kin the USA. Or could be investing in other forms of investment instead due to uncertainty.Also the tax breaks you mention are there so that the government doesn't need to invest in massive public housing projects.
If you did not have people investing in property you would not have a place to rent and would have to live in a public housing project instead." The rent it just too damn high"
Not really. In fact, it is cheaper to rent then to buy.
"Prices of other essentials have also risen, because the rent is too damn high"
Sorry, don't make any sense here. The price of bread increase because residential rent is high?
" Tax breaks for property investors have allowed the market to be ruined, and investors have done the deed "
There is a gap between owning your home and public housing. The goverment alone can not meet the all demand for public housing. The waiting list is over 10 years for some area, the quicker ( say very far away area) is still 2 – 3 year waiting. Tax breaks are designed to encourage investors to fill that gap by providing cheaper rent (refer to the first answer).
I know that there is a very serious message and issue behind this video… even so, it is one of the funniest you tube videos i have seen.
" The rent it just too damn high ! "
duckster wrote:The rental market is a supply and demand situation. If supply is less than demand the rent price increases.To a point this is true. The rental market is also confined by real wages, unlike buying, which is only confined by credit availability. In some instances around the country, people are paying more than 50% of their gross income on rent, this is not sustainable.
duckster wrote:So if investors were buying lots of properties and then trying to rent them out there would be an over supply of rental properties on the market and the rent charged would decrease.
The increase in rent has been caused by an increase in house prices but the residential rent is not charged as a percentage of the house cost. Only commercial is like that.
If house prices increase and first home buyers can't afford to buy then they rent.
The lack of property investors causes a supply problem for the increased demand for rental properties and the rent increases.
As house prices are high an investor cannot charge rent based on a percentage of the house price.
So a 3 – 4 % rent is most likely achieved before expenses are paid out.3-4% is an incredibly low yield for any investment, without capital gains, housing in Australia becomes a dud place to store money, even with NG.
There are half truths in what you post here duckster.
Over the last 10-15 years, prices of property have increased by much more than the cost of rent. it's really very simple, rent is caught between actual wage growth and property price growth. Rent has increased by more than inflation but not by the same factor that property values have.
More than just house prices act on what can be charged for rent.
duckster wrote:You also have not mentioned the foreign investors that buy Australian Property as an investment and then lock up the property in Australia and do not rent it out.Foreign investors aren't the only ones. Australia's true vacancy rate (not vacant rentals which range from 2 & 6% depending on location) is around 10% in most capitals. This is more local investors sitting on nest-eggs for retirement than it is OS buyers.
duckster wrote:Also the tax breaks you mention are there so that the government doesn't need to invest in massive public housing projects.
If you did not have people investing in property you would not have a place to rent and would have to live in a public housing project instead.It is true that the government uses housing tax breaks to avoid accountability, investment and spending by offloading it onto the PI.
I bet many tenants, however, like those I mentioned who are struggling with rents over 50% of their income, would much prefer public housing accommodation to what they have.
If there is more public housing, it would lower the cost of private rentals as it would take the absolute bottom out.
BTW – how much does the rent too damn high guy look like Samuel L Jackson with a beard.
Hi usual gang
This guy is talking about NY. Yes The rent is probably really high as the huge population all wants to squish into that tiny area.
Down the street from me is a perfectly good house for $550 pw. The median house price in that area is 1.2-1.4 mil. Across the road is a house that is rented for $360 pw. Once again value of house $1.2 mil. I spoke to the guy who bought the house across the road. He owns two houses side by side. He paid $85k for the rental in the 80's.
So tell me. Is the rent too high? In the same suburb there are rentals in the the $900 pw range. You tell me why someone would pay 900 instead of 550 or 360 pw. Nicer finish, in a particular school zone? More bedrooms. Yes I rent. Yes the rent is too damn high. But so what, I could live somewhere cheaper but I don't.
I have to say I disagree that most renters would like govt housing. Most renters want FREEDOM, and CHOICE which is why they rent. Many renters never want a mortgage, many renters move often for work so buying is impractical. Not all renters want to be tied to paying a mortgage for 30 years.
Keep is up all, very interesting to read about what people think.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Me1 – blame the banks for making credit too easy
2 – blame the government for restricting the supply of land (supply & demand issue)
3 – blame the government for the tax system which allows NG (for all forms of investment eg equities which are also overpriced).
4 – blame the unions for restrictive work practices which limit wages
5 – blame the government for a tax system which does not provide sufficient revenue to provide more welfare
6 – blame the government for not providing enough social welfare so that everyone can afford one or more propertiesGreat post Scott No Mates.
Is there a lack of any housing policy from yet another govt or am I out of the loop?
Might have forgotten to blame those pesky investors ; )
Time for the low cost housing revolution, get in on the bottom floor….
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Meooops, I almost forgot:
7 – blame the government for not creating satellite cities outside of the majors which allow for decentralisation of industry/commerce
8 – blame the government for not creating/planning better transport infrastructure like a very fast train allowing people to live further away from town centres & viably commute
9 – blame the government for PPP's meaning it costs more for a family of 4 to catch a train to the airport than to park for the day.Yep have to agree with those points Scott.
Don't get me started on transport and decentralization.
There should be infrastructure put in place now such as a bullet train that links major cities to prepare for the population growth. At least in the 50's they built things like dams etc or we'd have nothing now.
Short sightedness is ruining this country not investors.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeDWolfe wrote:Hi usual gang
I have to say I disagree that most renters would like govt housing. Most renters want FREEDOM, and CHOICE which is why they rent. Many renters never want a mortgage, many renters move often for work so buying is impractical. Not all renters want to be tied to paying a mortgage for 30 years.I never said most renters. I said those paying over 50% of their income in rent – those struggling at the bottom end of wages and rentals. Govvy rent takes a maximum of 25% of income or something like that, which would make a lot of low end renters better off.
As for the FREEDOM, govt agencies are often easier to deal with than REAs.
The bottom end, in rent and house price, costs way too much. This isn't to say that there aren't bargains to be had with both renting and buying in the middle and top.
Too many half arsed investors thinking they are property magnates by buying a bunch of cheap units in dodgy suburbs, thinking they are climbing some kind of investment ladder, when all they are doing is distorting a specific sector.
ummester.
Having grown up dirt poor, always renting, there are cheap rentals if you want them. My parents bought their first house when I was 18, we moved from house to house (3 in the one suburb) with cheap rent.
I do agree that there are investors who are basically slum lords. They don't fix anything, tenants live in shacks and are trapped as they can't afford better housing.
I think from that perspective the residential investing "industry" should be a bit more regulated. There should be minimum conditions in all rentals that agents and landlords should be forced to comply with, just like smoke detectors. They should have to put adequate heating and cooling in, they should have to make emergency repairs within a certain time period, things like that. We would have to not allow dodgy landlords to use it as an excuse to put the rent up though. Then we could weed out all the "investors" who are really slum lords. Also this would create a better housing market, people would stop seeing renters as scum, or a pain and just start seeing them as people.
The other thing that you haven't taken into account is rent assistance that many low income renters can apply for. However I don't know how many govt agencies you have dealt with, I don't think I would ever describe them as 'easy' to deal with.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email MeMost renters rent because they feel like its their only option. This may not be true, I've been trying to figure out ways to make buying a place possible, its not easy, but its not impossible either. Growing up poor lead me to believe I didn't have a chance, but now I know I could have done things differently. I'm hoping to sort it out and if it works out, I'd like to educate young poor/creative people about saving for their future, that some sort of security is possible. Only problem so far is, its not possible. Too much income spent on rent to save for a reasonable deposit. $50 a week ain't going to cut it.
" The rent it just too damn high"
Not really. In fact, it is cheaper to rent then to buy.
** True, but it doesn't mean the rent or the mortgage are reasonable. They are both obscene. A loan with approx 6% interest over 30 years is more like 50% interest at the end of the day. We are being ripped off by banks. The renter suffers as the IP owner suffers. This isn't really win-win. Its lose-lose.
"Prices of other essentials have also risen, because the rent is too damn high"
Sorry, don't make any sense here. The price of bread increase because residential rent is high?
** Most farmers, workers, bakers, truck drivers etc etc have to pay rent or mortgage. Cost of living goes up, cost of running a business goes up = cost of product goes up. My local supermarket now sells a loaf of bread for $8. There are cheaper loaves, but its all heading this way if you don't want white-super-processed-trash bread. Bread is just an example, apply the same theory to everything. Obviously there are other factors, like petrol, peak oil is like the property bubble, its going to end badly.
" Tax breaks for property investors have allowed the market to be ruined, and investors have done the deed "
There is a gap between owning your home and public housing. The goverment alone can not meet the all demand for public housing. The waiting list is over 10 years for some area, the quicker ( say very far away area) is still 2 – 3 year waiting. Tax breaks are designed to encourage investors to fill that gap by providing cheaper rent (refer to the first answer).
I've lived in govt housing. Its pretty dire. I think things could be getting better through integration rather than high density govt housing. There was a time you could afford to pay off a house in a few years on a wage of $30,000. I think we need to get back to that point, and spend money on more important things, like infrastructure for a country with little vision for the immediate future.
ummester wrote:duckster wrote:The rental market is a supply and demand situation. If supply is less than demand the rent price increases.To a point this is true. The rental market is also confined by real wages, unlike buying, which is only confined by credit availability. In some instances around the country, people are paying more than 50% of their gross income on rent, this is not sustainable.
duckster wrote:So if investors were buying lots of properties and then trying to rent them out there would be an over supply of rental properties on the market and the rent charged would decrease.
The increase in rent has been caused by an increase in house prices but the residential rent is not charged as a percentage of the house cost. Only commercial is like that.
If house prices increase and first home buyers can't afford to buy then they rent.
The lack of property investors causes a supply problem for the increased demand for rental properties and the rent increases.
As house prices are high an investor cannot charge rent based on a percentage of the house price.
So a 3 – 4 % rent is most likely achieved before expenses are paid out.3-4% is an incredibly low yield for any investment, without capital gains, housing in Australia becomes a dud place to store money, even with NG.
There are half truths in what you post here duckster.
Over the last 10-15 years, prices of property have increased by much more than the cost of rent. it's really very simple, rent is caught between actual wage growth and property price growth. Rent has increased by more than inflation but not by the same factor that property values have.
More than just house prices act on what can be charged for rent.
duckster wrote:You also have not mentioned the foreign investors that buy Australian Property as an investment and then lock up the property in Australia and do not rent it out.Foreign investors aren't the only ones. Australia's true vacancy rate (not vacant rentals which range from 2 & 6% depending on location) is around 10% in most capitals. This is more local investors sitting on nest-eggs for retirement than it is OS buyers.
duckster wrote:Also the tax breaks you mention are there so that the government doesn't need to invest in massive public housing projects.
If you did not have people investing in property you would not have a place to rent and would have to live in a public housing project instead.It is true that the government uses housing tax breaks to avoid accountability, investment and spending by offloading it onto the PI.
I bet many tenants, however, like those I mentioned who are struggling with rents over 50% of their income, would much prefer public housing accommodation to what they have.
If there is more public housing, it would lower the cost of private rentals as it would take the absolute bottom out.
BTW – how much does the rent too damn high guy look like Samuel L Jackson with a beard.
I just put up the rent because Water Rates have increased by 90% from last quarter and my council rates have increased by 30% since last year.
These increases to my costs are not in line with CPI but I could not increase the rent by the true expenses I am incurring and my rental income after expenses has now decreased even with the rental increase.Wynyard wrote:A loan with approx 6% interest over 30 years is more like 50% interest at the end of the day. We are being ripped off by banks
not really, money is just like other comodity. If you want to use, you will have to pay for it. Interest is the cost to use money.
Wynyard wrote:Cost of living goes up, cost of running a business goes up = cost of product goes up
residential rent got little to do with the cost of production. Try to ask for a pay rise because your rent just increase? Wage does, but it won't be decided much by residential rent .
commercial rent increase the cost of production but most sellers won't be able to pass the full production cost increase to buyers, unless you are in monopoly position with no subtitute.
In fact the price of the bread today is cheaper, if you take inflation, wealth increase, pay rise into account. Same with other other essentials.Wynyard wrote:There was a time you could afford to pay off a house in a few years on a wage of $30,000. I think we need to get back to that pointthe price will be decided by competition. PP want to live in desired area such as close to beach, job, good hospital… Say there is 1 mil pp. Aea number 1 only has 10 000 lots. So to live in that area you need to outbid 990 000 other. So now due to population increase, we have like 2 mil. in that case you need to outbid 1 990 000. it will be a lot harder job and much higher price.
So If someone pay too much income on rent, then he lives in the wrong area,( sorry, no offence intended here). Move down a little, one can save up a lot.
Good on you for trying to educate young poor/creative people about saving for their future. However for me, all you need to teach them is "don't spend the money they don't have". I know a guy, who say he can't afford to buy a house. A last visit to his rented place, I saw a near $ 10 k telly, infact he has two, just another one is a little cheaper.
I'll add to my previous diatribe (thanks to the later posters):
10: Blame the renters – they expect too much!
11: Blame the investors – who, because they cannot buy where they want to live, will rent where they want to live & buy investment property elsewhere locking others out of the market. (http://smh.domain.com.au/blogs/talking-property/a-renters-dilemma/20101101-17a7w.html)
12: Blame the government – if it wasn't for their policies of increasing population & densities we wouldn't have all this additional competition for the existing housing stock.
13: Blame the government – just not enough places at Uni to make everybody a doctor or lawyer so that we can all afford to live in a McMansion
14: Blame (your preferred deity) – why are there only 67 true beachfront houses on Sydney Harbour
15: Blame somebody else, afterall it is never your own fault that you are unable to achieve your dream!LOL
*Blamed*
Nice blog Scott No Mates.
D
DWolfe | www.homestagers.com.au
http://www.homestagers.com.au
Email Meinvestors provide a service. If you take away all the property investors you would be left with alot of empty houses in which you could not rent.
I understand your point but the free market rules and sets prices not investors.
DWolfe wrote:LOL*Blamed*
Nice blog Scott No Mates.
D
More like my rant for the week.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
