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mercsl

Sydney..time To Raise The Rents

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Indeed it did, those enormous hole in the ground and abandoned half built buildings were a feature of central Sydney for over a decade.

I doubt that this 'crash' will be any different. In my local area I know of three 'stalled developments, and one poor bloke, who was financially secure, with several properties owned outright.

He went into a 'profit sharing' ( read risk sharing ) agreement with a developer and now looks like losing everything he ever owned.

Or local city has a half completed multi story harbour front development that looks as if building work will stop any day.

This area also suffered a shortage in rental accommodation, when the market started to turn. Many of the would be investors tried to unload their rental properties.

In order to make the property 'more attractive', one of the first things they would do is to give the tenants notice to quit.

Then the vendor could spend a few thousand Dollars tarring the place up, and advertise the place with vacant possession. Soon, many of them realized, that they would never sell the place for the price they wanted, and unable to suffer the loss of rent for a sustained period, put it out to let again.

Though now they owed even more money than they did before, so they tried to charge more rent.

Now our local agents have many places to rent at reasonable prices. The owners have realized that they are both unable to sell in this market, and unable to raise the rents, because of the old adage.... you cant get blood out of a turnip.

With all the new property that has been built in Sydney over the past few years, I find it hard to believe that there is a real shortage of 'potential' rental properties.

I think the 'shortage' is caused by all the wannabe investors trying to get out of "Investment Headquarters" before the smell of smoke gets too strong :)

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It's broadly similar in Hobart. We don't have the big developments in the first place so no real threat of empty holes in the ground. But when it comes to houses there have been an awful lot of them built over the past 2 or 3 years and a walk around the streets of practically any middle or outer suburb reveals plenty of empty houses.

Whilst I know that there are homeless people, they are generally not potential property purchasers. If there were no properties for sale then the Friday edition of the Mercury wouldn't be literally equally split between the real estate advertisements and the actual newspaper. Same number of pages in each this week.

Likewise rentals. If it were impossible to find a place to rent then I think we would have heard plenty via the media by now especially given we're in the midst of an election campaign down here.

So there's empty houses whilst those who want a house generally have one. Those who don't have one but want one are likely to be in that position for no reason other than economics. They simply can not pay the present price, or have chosen not to, and are sharing or living with parents instead.

So supply exceeds demand at the present price level. Economics 101 what happens next unless either there is a surge in demand (why? - there's been plenty of time but it hasn't happened yet) or someone starts knocking down houses and not replacing them. Both of those seem rather unlikely and the building boom is still going thus adding to supply, albeit at a slightly slower pace it seems.

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Guest Winners and Losers

Indeed it did, those enormous hole in the ground and abandoned half built buildings were a feature of central Sydney for over a decade.

I doubt that this 'crash' will be any different. In my local area I know of three 'stalled developments, and one poor bloke, who was financially secure, with several properties owned outright.

He went into a 'profit sharing' ( read risk sharing ) agreement with a developer and now looks like losing everything he ever owned.

Or local city has a half completed multi story harbour front development that looks as if building work will stop any day.

This area also suffered a shortage in rental accommodation, when the market started to turn. Many of the would be investors tried to unload their rental properties.

In order to make the property 'more attractive', one of the first things they would do is to give the tenants notice to quit.

Then the vendor could spend a few thousand Dollars tarring the place up, and advertise the place with vacant possession. Soon, many of them realized, that they would never sell the place for the price they wanted, and unable to suffer the loss of rent for a sustained period, put it out to let again.

Though now they owed even more money than they did before, so they tried to charge more rent.

Now our local agents have many places to rent at reasonable prices. The owners have realized that they are both unable to sell in this market, and unable to raise the rents, because of the old adage.... you cant get blood out of a turnip.

With all the new property that has been built in Sydney over the past few years, I find it hard to believe that there is a real shortage of 'potential' rental properties.

I think the 'shortage' is caused by all the wannabe investors trying to get out of "Investment Headquarters" before the smell of smoke gets too strong :)

Hi Hino - when I was in Newcastle a few people from work were trying to rent and it was literally 10 people for every house. I would like to raise the rents in Oz! They are super cheap anyway. I would also like my tenants to pay my council rates thank you very much, just as I have to pay my Landlords council tax in the UK. They were expecting crazy money for those places on the harbour.

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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