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An historical event about to take place in Australia; Rental prices have peaked in ALL capitals and will now decline for years
Topic Started: 13 Jul 2014, 06:59 PM (18,303 Views)
MMM
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I have said for many years that rental prices in Australia will hit a peak from which they will then decline for years as jobs will no longer be there to sustain them.

For those unaware , rental prices for houses in the most expensive areas of sydney, with the top end of these properties ,weather it be the eastern suburbs or northern beaches areas have been declining since 2008 when the gfc first rared its head.

Over this time , rental prices for lower to mid to higher end property has risen in a big way in many areas of Australia and for these areas of Sydney I mentioned above have propably risen the most.

But it would now appear that we have now reached this peak from which rental prices will not only no longer grow, but they will start falling. And they will start falling to levels that will be historic falls in rental prices for Australia.

In these areas of Sydney I mentioned above, rents have never really fallen before for lower to mid level property, ever. And if it has, it has been in a minuscule way, if any ,for all of history.

What has usually happened over the decades is this, prices have risen up a bit, rents have risen up a bit.But then they may stay a bit stagnant for a while , perhaps years, before rising again. But they never really fell, have just stagnated for a while before moving up.

What we are about to witness in all capitals, will be historic rental price declines. This will continue for years and has never happened before. So much for the bulls hoping for a repeat of history, its changing fast, real fast.

So we are now at a historical point in Australian history, from which rental prices can no longer grow. Not only can they no longer grow, but they cannot be sustained. And for this reason they will fall.

The dawning of reality has arrived. :bye:
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peter fraser
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Funny Ted but I was just reading this article.
Quote:
 
Residential rents haven’t fallen in the last 40 years
Pete Wargent


Today I’d like to take a detailed look at rental growth in Australia over the long term, much of this information is embedded within the ABS inflation data that was recently released.

Here I’ve run a chart of rolling 12 monthly rent increases over more than 40 years:

Posted Image

Goodness.

This kind of chart is a property spruiker’s dream, since it shows that annualised rents have never fallen in Australia across a time-span of more than four decades.

In fact, rents have never even fallen in nominal terms in any individual quarter let alone over a 12 month period.

One suspects that this is as much an example of behavioural finance in action as it is a role of pure supply versus demand.

That is to say, even in times of recession or weakened rental demand, landlords appear to have been more inclined to freeze rents rather than actually cut them.It’s a cognitive or psychological bias that consumers don’t expect prices to fall.

After high inflation in the 1980s which saw the cost of almost everything rise dramatically, rental growth was far more subdued in the 1990s before a dwelling supply shortage saw rents beginning to really ramp up again towards an 8% annualised pace from around 2007.

Slowing rental growth

The above chart shows that rental growth has been slowing again of late to 2.9% in the year to March 2014 despite relatively tight property markets in some regions.

Why?


The reasons are arguable.

At least part of the reason, in my experience, is that landlords essentially have no pressing need to demand rental increases since the overwhelming majority of investors will at the very least be neutrally geared in the current low interest rate environment.

Another argument might be that in many areas, the rental property markets simply aren’t that tight and therefore landlords are unable to command higher rents than they are already are.

Apartment rents have risen strongly in Sydney over the past five years, but growth has been more subdued elsewhere and in other sectors of the market.It’s actually very tough to generalise on a national basis.

The long run

On the flip side, while housing bears might be keen to run such a chart to show how rental growth has eased of late, it’s doubtful they’d be so keen on running the full 40 year chart since it raises a couple of awkward questions.

Firstly, the rent versus buy equation looks to be very much skewed towards those who decide to buy property as a place of residence since rents have continued to grow relentlessly come hell or high water for more than 40 years


Read Full Article HERE.
Attached to this post:
Attachments: rentsydney.jpg (77.51 KB)
Edited by peter fraser, 13 Jul 2014, 08:37 PM.
Any expressed market opinion is my own and is not to be taken as financial advice
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Bardon
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peter fraser
13 Jul 2014, 08:34 PM
Funny Ted but I was just reading this article.

So Armageddon is canceled until further notice.
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peter fraser
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Bardon
13 Jul 2014, 08:36 PM
So Armageddon is canceled until further notice.
It's not cancelled for Ted aka MMM
Any expressed market opinion is my own and is not to be taken as financial advice
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MMM
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peter fraser
13 Jul 2014, 08:39 PM
It's not cancelled for Ted aka MMM
Its not cancelled for anybody. And interesting article Peter.

Its a reality you are all about to see unfold.

I have already studied it and have found rents have already started dropping in Sydneys eastern suburbs, both for units and also housing. I am seeing some rents down around 10%, this has never ever happened before, just as your spriuker mentioned in the article you posted above Peter.

You are quick to jump on board here Peter, but I will remind you , you had no clue on interest rates when I clearly explained it years ago. Yoi also had no clue when I told you the extent at which the economy would decline. And you have seen me call rents before like no so called expert could ever hope to.
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peter fraser
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MMM
13 Jul 2014, 09:00 PM
Its not cancelled for anybody. And interesting article Peter.

Its a reality you are all about to see unfold.

I have already studied it and have found rents have already started dropping in Sydneys eastern suburbs, both for units and also housing. I am seeing some rents down around 10%, this has never ever happened before, just as your spriuker mentioned in the article you posted above Peter.

You are quick to jump on board here Peter, but I will remind you , you had no clue on interest rates when I clearly explained it years ago. Yoi also had no clue when I told you the extent at which the economy would decline. And you have seen me call rents before like no so called expert could ever hope to.
No offense Ted but you couldn't predict what you are having for dinner tomorrow.
Any expressed market opinion is my own and is not to be taken as financial advice
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Shadow
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Evil Mouzealot Specufestor

MMM
13 Jul 2014, 06:59 PM
we are now at a historical point in Australian history, from which rental prices can no longer grow. Not only can they no longer grow, but they cannot be sustained. And for this reason they will fall
Ted, two years ago you told us house prices could no longer grow, or be sustained, and that prices were about to crash. This was in 2012 when you panicked and sold your Sydney home. You piled the proceeds into gold, which you said was going to $2000 in 2012 and $5000 in 2014. But instead of house prices crashing and gold going to the moon, the opposite happened. Sydney house prices are up another 25% since you said prices would crash, and gold is down 30%.

So my question to you is this... what makes you so sure this new prediction of yours will be successful when your earlier predictions were such a disaster?
MMM
13 Jul 2014, 09:00 PM
I am seeing some rents down around 10%, this has never ever happened before, just as your spriuker mentioned in the article you posted above Peter.
Ted, the problem is you have no idea what has happened before, nor what is happening now, never mind what will happen in the future.

It's not unusual at all for rents in areas of Sydney to fall. Here are some articles discussing it happening in 2001, 2008 and 2012.

I'm sure I could find more if I could be bothered.

http://somersoft.com/forums/archive/index.php/t-1907.html

http://www.smh.com.au/news/national/rents-tumble-in-inner-sydney/2008/12/05/1228257317698.html

http://news.domain.com.au/domain/real-estate-news/sydney-rental-fall-takes-the-heat-off-tenants-20120413-1wx6e.html

You are panicking over nothing again Ted, just like in 2012 when you panicked and sold your Sydney home right before the boom.
Edited by Shadow, 13 Jul 2014, 09:53 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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MMM
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peter fraser
13 Jul 2014, 09:35 PM
No offense Ted but you couldn't predict what you are having for dinner tomorrow.
No offence Peter, but you have never had a clue on anything meaningful.

Heres what ted said here Peter, can any so called expert make predictions like this. No they cannot, they could only ever hope to. Last post in thread linked below. Clowns :bye:


http://australianpropertyforum.com/topic/10088358/3/
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ThePauk
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https://www.parliament.nsw.gov.au/prod/parlment/publications.nsf/key/Houseprices,ownershipandaffordability:trendsinNewSouthWales

Rental prices, which form a large component of a prospective home buyers housing costs, have risen consistently in NSW over the last two decades, with the growth most pronounced in the inner urban areas of Sydney. Between March 1993 and March 2013, the median rent (for all properties) in the inner ring of Sydney more than doubled from $195 to $560; while the median rent in the middle ring of Sydney increased by $300. [5.1]

Home ownership rates for young households have declined steadily since the mid-1980s and represent a negative outcome of the affordability problem in Australia. According to Battellino (2012), it may be that this is driven by demographic factors; but it is largely financially driven by unaffordability. [6.1]

There are wealth implications from not having affordable access to home ownership. Owner-occupiers not only own all of the owner-occupied housing wealth, they also own most of the wealth in investment housing and most non-housing wealth. Baby boomer households (born from 1945 to 1960 and in middle age in 2005-06) who were able to become home owners (most likely in the 1970s or 1980s and no later than the 1990s) have the greatest holdings of all forms of wealth. Households who have not been able to gain access to home ownership have relatively little wealth of any sort. [6.2]

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lextsy
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I bought my house in Cromer in 2011 for 940k Its probably worth about 1.15million now when you look at comparable properties. I have a 2 bedroom and a 1 bedroom flat inside the property which is rented out.

2 bedroom rented for 550pw in 2011. Tenants moved out in April and rent was raised to 600pw. It took 1 day to find the tenant on gumtree. The 1 bedroom rented for 330pw in 2011 and late 2013 it was upped to 365. Its still too cheap and will be 400pw when this tenant leaves.
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