The rental crisis has ended with property developers flooding the market with apartments they have been unable to sell and renters finding cheaper accommodation with the knowledge times are hard and they are worried about their jobs. The number of vacant properties in Melbourne, Sydney and Brisbane has returned close to long term averages.
SQM Research managing director Louis Christopher says it debatable if capital cities are seeing rental shortages. “I think it’s very debatable whether there is a shortage… and especially in Melbourne whether there is one or not. We have to be careful about how this is discussed, because the topic is certainly up for debate.”
It’s believed the free flow of capital in the last decade has contributed to rising prices and not a shortage of homes. This is contrary to Real Estate and Housing Industry lobby groups who have been flogging housing shortages like there is no tomorrow. The free flow of capital is likely to dry up quickly with the lead from Westpac this week in reducing LVRs.
In Melbourne vacancy rates increased from 3.1% to 3.5%, Brisbane saw an increased from 2.9% to 3.4% and in Canberra the figure increased from 0.7% to 0.9%.
Data shows a trend of renters moving to cheaper accommodation in the outer suburbs. “If you know times are hard and you’re worried about your job, chances are you will opt for cheaper rent. People are opting for a $600-a-week rent now, rather than, say, $1000 a week — it’s as simple as that.”
This will put a spanner in the works for landlords who have been pumping up rents in an economy where wage rises have been close to non-existent and the reduction in the hours worked has been common. These people, faced with rising rents have no choice but to vacate and move to cheaper accommodation.
Louis Christopher also reports the national vacancy rates have been driven by developers who have had to release apartments onto the rental market as they have been unable to sell them.
In Sydney, areas like Rhodes who have a huge number of apartments being built has a rental vacancy rate of 10.9%. Along the Pacific Highway and the rail corridor, Gordon is trailing a little behind at 8.3% and Turramurra is 7.6%
Mr Christopher also indicates that to a lesser extent, many home owners also unable to sell their properties have been forced to rent them out, adding to stock levels.
» Rise in rental vacancies raises questions about housing shortage and soaring prices – Smart Company, 24th January 2010.
» Budget renters ease inner-city squeeze – The Australian, 23rd January 2010.
Nothing like speculative overbuilding to provide excess capacity! And there we were being told time and time again by such “reliable” Sources as the REIA and BIS Shrapnel that there was a “Rental Crisis” – dead right there was (NOT!) – all the Renters have bought overpriced homes thanks to the FHOB and with the money rates on their inevitable way back UP, I’ll bet they wish they’s stayed renting!
Ah well, the Government can flog off the waterside developments to the Chinese investors, but I’ll be surprised if they are interested in anything witout a $1M view! So much for the Western Sydney developments!
With the world heading into GEC V2.0 and the public mindset of housing shortage and ever rising prices starting to crack, Australian housing is heading for a watershed moment. One of those times where the conventional wisdom of the last 30 years is ditched and reversed. It won’t be the first time, or the last.
A recent BRW called for lease holders to lock in new leases ASAP as ‘rents will shoot up.’ Interestingly, in the same edition, a reality expert called the lack of take-up in commercial space as an ‘indication of a shortage of supply.’ I laugh at how funny BRW is… no comedian can get close to the lunacy of it. It’s also a great indicator of reality, if you invert everything it states.