Two speed rents

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Unconventional Economist


  1. Canberra and Darwin (the two big government towns we have in this country) are looking much healthier with growth and margins than the other cities – any reason for that do you think?

    We have had lots of huge corporate job losses announced in Victoria in the last few weeks so I’d expect that it will soften the property/rental market further still. However Premier Baillieu announced a “prison led recovery” on Saturday just the same as Premier Kennett announced a “gambling led recovery” in the nineties. Hundreds of new prison beds & lots of new jobs in new and expanded prisons across Victoria. Hooray! I’m sure all those sacked ANZ workers won’t mind moving to Ararat or Shepparton to work in prisons…

    • reusachtigeMEMBER

      Ahhh, prisons – an ever growing business. Chuck in a few more laws, find some drugs to get tougher on, and whoosh, more prison business here we come! Oh, but we pay for all that.

      • Not as much a government town as Canberra or Darwin; Darwin is surprisingly government orientated and relies a lot on the Commonwealth spending. There’s a heap of defence jobs in the army/navy/air force up there and it’s very difficult to get trades & builders up there hence the extremely high cost of housing both to rent and build.

  2. “Moreover, with rents flat lining, the recent improvement in Melbourne gross yields, from 3.6% in September 2010 to 4.0% currently, has been caused entirely by falling house prices.”

    The spruikers will spin this into an investor benefit – though I cant see it.

    In Melbourne, the ‘gearers grand strategy is in tatters. A $10 rise in rents in 3 1/2 years and falling prices means the sacrifices have been futile and the opportunity cost immense.

    People have strong views about negative gearing: it is either a god-given right or an abomination. More exactly, it is a roller coaster strategy suitable only for a vigorous bull market.

    The semi-numerate ‘gearers are always late to the party, late to leave. The voices calling ‘last drinks’ are few and muted. They will wake up on the back lawn as dawn breaks, paralyzed by past indulgence and completely unable to participate in the new day.

      • Run Property do that every quarter or so – they cherry pick a few suburbs in the major cities which, in their rental rolls, have had massive rental growth, most likely due to some compoisitional bias. They then do a press release and get a nice headline.

        Really, any rental reports from a RE agency (particularly the pap from Run) is just a complete waste of time and not to be bothered with. From a REA spruiking sense, it sure makes a nice headline, though!

        APM and RP Data’s rent reports are definitely worth a look, however.

  3. Why would we trust what Australian Property Monitors? They are not able or willing to provide decent data. Over the last year, even simplest of all data, auction clearance rate, provided by APM was getting worse every week. At the end of the year their data was on average 15% off compared to other sources.

    • ravi – and yet you posted their data as proof on other forums this week.

      Now which is it ravi – are you right here and wrong elsewhere, or wrong here and right elsewhere?

      It’s one or the other.

      • Is this bloke compiling a database of peoples’ posts across the internet so he can quote their inconsistencies back to them at a later date?

        In all my time I’ve never encountered such a pedant.

        • He seems to be one of many online personalities paid by business interests to spruik about housing market in Australia. They keep record of everything written on housing topic on the web. They use that data to compromise credibility of persons who write posts because they have no other arguments left to support their “housing fairytale”.

          • Settle down guys. Peter has been commenting here for a long time. He is not a “troll”.

            In my view, the APM rental data is good and is in-line with RP Data’s. Their auction clearance data is another matter, but that probably relates to agent’s being (deliberately?) tardy in their reporting of auction results to APM.

      • If you know the answer, why we should trust APM, please tell us. If not, please hold your personal frustrations for yourself. You seem to have some personal issues with raveswei.

        It’s not of interest on this blog or you what where and in which contests I post. If you have something constructive to say on this topic please say, otherwise please do not stalk me.

        BTW. My opinion about crappy APM data is consistent and well documented.

        • Maybe its the tone of PF’s writing? I have often just pressed the off button and resisted a response – what I should have done now I suppose 🙁

  4. Within in Melbourne I wouldn’t be surprised if there is a two speed rental growth with the outer suburbs (where all of the new building has occurred) being smashed and the desirable inner suburbs rising

    • Anecdotally…I live in a desirable inner suburb (Malvern) and rents and house prices have dropped fairly noticeably.

      • +1

        I live in a “desirable” eastern suburb of Melbourne and my rent is dirt cheap (about 1% yield on the value of the property I live in). Rent has not increased $1 for about three years – AND if it does, I’ll move in next door or down the street, there’s always plenty of houses for rent available in the neighbourhood.

        • Comparing one expensive thing (rent) with an outrageously expensive thing (house) and then declaring it cheap is not valid in my book.
          I am sure that rent is very cheap for a rich economist to pay. But could an ordinary worker easily afford your rent?
          If not, your rent is not cheap.

          • Its called yield and evaluated as an investment as Price To (didided by) Earnings as is very relevant.

            For Greco to ‘buy that house’ he’d be forking out 8x to 9x his current rent (1% yield, P/E of 100).