Rents are falling in every state except Melbourne, according to CoreLogic RP Data rental data for the month to June 30. As more investors pile into the market, rents have risen just 1.1 percent this year, the worst result since records started in December 1995. In real terms, rents have failed to keep up with inflation and are now falling.
Rents fell the most in Darwin, collapsing 2.5 per cent in the month. Perth rents tumbled 1.1 per cent, Canberra 0.70 per cent, Hobart 0.60 per cent, Brisbane 0.5 per cent, with Sydney and Adelaide both falling 0.2 per cent. Melbourne bucked the trend rising 0.6 per cent.
The report indicated, “Sluggish rental growth is most likely due to surging investment demand, record high levels of new housing construction and a slowing rate of population growth nationally.”
» Tenants rejoice: Rents growing at slowest pace since 1995 – The ABC, 10th July 2015.
You could have fooled me. In my experience of looking for a new rental for the last six months, rents are surging not falling. The rental market in Sydney is rife with greedy and unrealistic landlords who think we can all afford to pay for their ‘investments’, while they get the tax breaks and we get shafted even more. I hope the article is right, because if rents do come down, then so the selling will begin – and maybe we’ll be able to finally actually afford to buy a house.
Yeah, and pigs might fly.
I’ve seen a divide here in Melbourne. There’s an influx of lovely rental properties at wildly unrealistic prices (23% higher than market average). However they’re not getting let, they’re just sitting there and some are slowly dropping in price each week.
I don’t want to pay off someone else’s stupidly over paid property and it’s delightful to see other renters agree with me. We don’t let them. Collectively taking stand! If there was a rally called against negative gearing I’d totally join.
Been watching one down South of Adelaide – in the same street where I live. It became vacant a couple of weeks ago. First agent couldn’t let it (price too high), so it looks like they have been fired. New agent opened the property last Saturday, Wednesday, Thursday and I see there is another open tomorrow morning.
She is trying, but I suspect the price is just too high and maybe the landlord won’t drop the price. We are in between two new subdivisions/developments, so there are plenty of brand new houses around the corner going cheaper.
I bet there’s going to be a fair bit of urgency by the Chinese to sell their Aussie property investments to fund all those margin calls thanks to the crashing Chinese stock market.
What do you do when your Government won’t let you sell your shares to cover your losses but those margin calls keep coming from the shadow banking system.? Sell the overseas investment property and sell it fast.
when the collapse come it will be bitter sweet…i will not feel for these poor fools who will end loosing everything because its people like that is the reason a lot of my family and friends couldnt efford a house in the last 10 years or more
@ Rupert,
Take a drive to the northern beaches this weekend. I take your word that asking prices are madness, I wouldn’t know. But as I’ve stated before, every second joint seems to be for lease/sale. The sold stickers go on pretty quick I’ll say, but I’m seeing more and more properties vacant for lease. If there is such a thing as rental stock, then it’s growing.
How it translates into price, who the %#{ knows anymore?
In Sydney greed has no limits.Just heard,that in Greenwich,there is, on one site, a development of 2000 apartments to be built.That is minimum 4000 new residents.The population of this suburb is currently 10,000.The roads are as they were in mid sixties, last century.The traffic.From Roseville to Lane Cove,3 kilometres in peak hour,can take 40 to 45 minutes.Maybe they will ban cars???
The consequences of the crashing Chinese stock market will be a surge in RE investment demand in Aust. As high net worth Chinese head for the doors we will see frantic increases in housing, resulting in lower rental returns. A great time to sell and rent.
http://news.yahoo.com/chinas-rich-seek-shelter-stock-market-storm-foreign-102247908–sector.html
It’s 100 percent true down here in Perth ! After struggling few years ago to snatch a shit hole house for premium price, now houses are flooding into the market at a crazy pace. I renew my lease last month with a 20 percent decrease !!! The real estate was honest enough to agree with me that l had plenty choices and was obliged to accept my proposition or risk to leave an empty house. They even start to offer a week for free and most of them are available now wish mean they’ve been sitting on the market for more than a month. Now, l wait for the panic sell and hopefully will be able to get into my own roof in the next 1-2 years I reckon. 😉
@perthpigeon,
Would love to be a fly on the wall when the agent contacts the owner to put your discount proposal to them. I bet it would have been a flat NO until the agent succeeded with your logic. Less of something or all of nothing.
On the flip side, my Canberra mate had a similar issue with an agent and plays hard ball with his tenant in Melb. He rips into the agent that suggest the same as you. They make sweet FA on the investment and it causes a lot of stress resulting in a family car driving around the Canberra with no rego for 6 weeks.
Don’t know about the rental demand in Melbourne, but if their tenant goes for a 20% reduction or walks, they’re fucked. Their whole deck of cards comes down. “Investment property for the kids future” indeed…OMFG. Three kids under five, and M+D are up to their chins in hot water. 5 years ago I was the idiot, nothing has changed, yet everything has. That is what I was trying to plead at the time. Nobody listened.
So I wonder what it’s like backstage of property porn fever unplugged.
@8 Yes exactly, and I heard on the radio (ABC 702) a Chinese RE Agent and a Chinese stock market analyst (both from Shanghai) talking up an increase in Chinese investment in RE especially (and only) in Sydney. The point is, unless you’re a resident or a citizen it’s ILLEGAL! So how is this allowed to happen? Sure, come and invest in business or infrastructure, be our honoured guests, but houses – NO!
Let the rent seekers burn…This nation needs investing in future generation instead. Invest in education, renewable energy, start-ups, hi tech and science, manufacturing, the list can go on and on. The rent seeking mentality of Australia has to change to reign the effect of the eminent coming collapse. The cultural shift for the riddance of the excess fat of the capitalistic unproductive investments starving the whole productive economy from going forward. What is the purpose in life if it is just solely dedicated as a whole in paying back massive bloated debt for a heck of a pile of bricks called a house..
Coming up to a Minskey moment:-
Minsky moment is a sudden major collapse of asset values which is part of the credit cycle or business cycle. Such moments occur because long periods of prosperity and increasing value of investments lead to increasing speculation using borrowed money.
At the end of a bubble a house is only worth what a buyer will pay -if you can find a buyer. Supply and demand are irrelevant. When market sentiment turns buyers will be no where to be seen. There will be a lot of people with financial commitments that are far greater than the value of the asset they paid for.
More rentals = lower prices.
Works for me.