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Rent predicted to rise by as much as 50 per cent

Discussion in 'Real Estate' started by Simon Hampel, 4th Apr, 2008.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The World Today - Rent predicted to rise by as much as 50 per cent

     
    Last edited: 17th Sep, 2016
  2. Alan

    Alan Well-Known Member

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    I just put the rent up on a property about 8% without a murmer from the tenant. At current demand levels I'm expecting to do the same again in 12 months.

    I'm sure some tenants think a $30 or $40 rent increase is a lot but then if they think what a couple of percent interest rate increase does to an average Sydney mortgage then it suddenly doesn't look too bad.
     
  3. Chris C

    Chris C Well-Known Member

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    I'm currently renting a unit in Brisbane, and when I took over the lease (there was 4 months remaining on it) rent was $300/week. We renewed the lease in January, but had to agree to a rental increase to $320/week on 6 month lease, which I guess we sorta saw coming considering how competitive it was to initially find a place.

    About a week ago new tennants move in to the unit next, and apparently they are paying $350/week, and there apartment is considerably.smaller...! Assuming our rents goes up to something similar that will be a 13-20% increase in rent over the last 12 - 18 months!
     
  4. crc_error

    crc_error The Rule of 72

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    tenants have had it to easy for far to long.. we are playing catch up time!
     
  5. Jacque

    Jacque Team InvestEd

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    Exactly Alan. If you look at official RBA interest rates since Jan 2005 it becomes fairly plain that borrowers on variable rates have been the ones increasingly out of pocket, not renters.



    2008 6.75 7.00 7.25

    2007 6.25 6.25 6.25 6.25 6.25 6.25 6.25 6.50 6.50 6.50 6.75 6.75

    2006 5.50 5.50 5.50 5.50 5.75 5.75 5.75 6.00 6.00 6.00 6.25 6.25

    2005 5.25 5.25 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50 5.50

    (Jan to Dec L to R)

    If you took out a mortgage in Jan 2005 of $400K your payments would have increased by a whopping $8K p/a (or $153 per week) since then, which really starts to hurt cashflow. Rents basically haven't increased for a no. of years (at least here in Sydney) and are beginning to now play catch up, given the events of the last three years. I don't presume to understand economics but it all looks like a natural progression to me. Rents will continue to rise as long as affordability remains low, interest rates high and the economy strong (consumers doing what they do best by spending excess amounts).
     
  6. Phoenix

    Phoenix New Member

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    I am only 26 so haven't been invested in or lived (too young to understand the last one) for what I would call full financial cycle. But dad and I were only talking about this this morning, to us it seems that the property boom was fuled by easy credit and double income lending, while property prices were rising, rents remained stable or went back in some areas, now that people can't afford to buy and have to rent, the rent prices are only increasing as they should. Seeing as property prices at least doubled in the last 8-10 years, shouldn't rent prices increase dramatically as well?

    Am I understanding this correctly?
     
  7. Jacque

    Jacque Team InvestEd

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    Hi Phoenix

    It certainly makes sense to me- the simple laws of supply and demand are at work in the current property market as property growth is not usually consistent, but awash with peaks and troughs.

    The rental market is a by product of whatever the housing market is experiencing growth-wise, but sometimes the lag period (between investors buying/not buying and property availability for rent) can mean that increasing/decreasing rents can happen 12-24 mths after a slump/boom period.
     
  8. Redwing

    Redwing Well-Known Member

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    PERTH..WA
    Last couple of recent rental increases have been
    • $200 to $250
    • $180 to $200
    • $300 to $350
    • $270 to $300
    • $205 to $230

      New IP $420, in same area as the $350 IP, but comes with some furniture


      Interest rates on some of these still fixed from 2005 till 2010
    50% in five years does not seem too big a leap [​IMG]