Sydney property panic as prices and rents plunge

By Leith van Onselen

MB’s warning that Sydney property investors are entering a doom loop of falling rents and prices has received support from various quarters.

Late last week, The AFR reported that real estate agency, LJ Hooker, is trying to coax vendors in Sydney’s west to sell now before prices plunge further:

LJ Hooker’s Peter Tannous has his work cut out for him in Sydney’s west, where he is now either coaxing desperate homeowners to close the sale of their properties quickly before the market dips again or consoling those who have sold at a loss.

…this week Mr Tannous sold a two-bedroom unit for a 30-year-old homeowner who “couldn’t afford his mortgage” any more with a newborn arriving.

The apartment on O’Neill Street in Guildford sold for $450,000 even though the owner wanted $489,000. He bought the home for nearly $483,000 at the peak of the market in 2015.

“The royal commission has done the west no favours as banks tighten their lending criteria and focus more now than they ever did on serviceability,” he said…

Unfortunately, Mr Tannous and his colleague, LJ Hooker Merrylands principal John Contos have plenty more similar properties to sell especially for their investor clients facing pressure from rising rental vacancy rates and falling rents in Sydney…

Over the weekend, The AFR warned that Sydney renters are facing a deadly combination of falling prices, rising rental vacancies and falling rents:

Interstate refugees such as Crowley who are baling on Sydney, along with a rush of new apartments for rent and falling prices that have prompted some would-be sellers to look for tenants instead, have all combined to produce a rare breed of Sydney market, one where renters can call the shots.

Some 2.8 per cent of all rental properties in Australia’s largest city are vacant, and the way things are going that could go as high as 4 per cent, a level not seen since the post-Olympics property lull of 2004, SQM Research’s Louis Christopher says.

It seems the many new apartments will keep rents down for some time. ANZ Research data shows nearly 90,000 dwellings are under construction in NSW including 66,000 apartments…

Rental conditions will be worsened by the fact that tenants can now break a lease by paying a four-week penalty, BresicWhitney’s Shannan Whitney says.

“In the past you couldn’t leave until a tenant was found but now people will break the lease, pay the penalty and still be in a better position after finding a cheaper unit,” he says…

Rent.com.au chief executive Greg Bader agrees there is plenty of scope for tenants to negotiate lower rents.

Meanwhile, as reported this morning, Sydney’s auction clearance rate is projected to fall to 30-year lows, weighing further on Sydney’s market:

SQM Research analyst Louis Christopher said spring clearance rates would likely fall to a similar level to 29 years ago due to a sudden surge in new listings. This will add to the glut of unsold properties already on the market, giving buyers a huge selection to choose from.

“It’s going to be a very good spring for home buyers,” Mr Christopher said. “Auction clearance rates are already very low and since spring usually sees a bounce in listings every year, it will mean the clearance rate will go even lower”…

“The only way clearance rates can go from here is down,” Mr Christopher said. “There is always an increase in auctions over spring because homeowners think the better weather and chance to get the sale done before Christmas make it the best time to sell.”

Last week, CoreLogic’s Cameron Kusher posted the below chart showing that Sydney rents fell by 0.4% in the year to June – “their greatest decline in at least 12 years (timeseries of our data)”

Which came as Sydney’s rental vacancy rate hit the highest level in the series’ 13.5 year history at 2.8% in June, according to SQM Research:

Meanwhile, Sydney dwelling values have fallen by 5.4% over the past 11 months:

Thus, Sydney’s army of highly-leveraged landlords are facing the nightmare scenario of falling rental returns and falling dwelling values, at the same time as many investors’ mortgage repayments will increase by 35% as they transition from interest-only to principal and interest.

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Comments

      • @arrow – no, it’s not.

        In the world where I live, wages haven’t gone up, and the value of the currency has gone down.

        Tell me about your world, please.


      • and the value of the currency has gone down.

        Falling currency is usually considered inflationary – your stable rent now buys less imported goods, so in a purchasing power sense, it has gone down.

      • Robert – get your head out of first-year-economics textbook mate.

        Falling purchasing power for imports with flat rents and flat wages means you are getting reamed.

        That you are getting relatively less screwed on rent than imports doesn’t actually help anyone.
        Falling purchasing

      • Arrow2 never implied you were better off, just that flat rates were still falling in real terms. In a ‘black letter’ sense that can be true despite the remainder of people’s purchasing power suffering further falls.

      • That would be an unconventional use of language, if he really meant “rent is falling in real terms… while getting harder and harder to pay”

      • lol, love a good debate on semantics.

        In isolation, A2 has made a simple statement of fact. Drawing personal conclusions, that are beyond the scope of the initial statement, is an exercise in subjectivity.


      • That would be an unconventional use of language

        Why? ‘Real terms’ simply means price is lower after inflation is taken into account. Inflation is still positive, so zero change to rent means a fall in real terms. I’m unaware of another meaning of ‘real terms’.
        What you seem to be talking about is whether renting has become more affordable, which is a separate and distinct question.

      • Yeah mate. Fair point.

        I would also add that the surface of the sun is relatively cool.

        (Compared to the core of the sun. Or the surface of Sirius)

        Semantic-on, mateys.

      • Peachy, A2’s right, but I’m with you. Waste of time if you don’t look at what happens to income.

      • There is some nuance about this, though.
        In my own case, I’ve had zero rent rises over the last two years, and a very small wage rise, in line with inflation. So, from that perspective, I can see the real rate decline, small as it is.
        Meanwhile, my other expenses have increased quicker than the headline inflation rate. The result is I’m worse off overall, but, and it appears worth noting, rent now has less to do with why I feel impecunious.

    • It will probably go up as more people decide to continue renting rather than buy a property in a falling market.

      • The entire point of this article is there is a shortage of people who want to rent in Sydney right now.

      • Leo, rents tend to follow wages. Wages are flat and thus rents stay flat. People deciding not to buy houses does not by itself raise rents because the number of people and the number of houses is not changing.

        (I’m not saying there aren’t actual changes in both populations and the number of dwellings – there are. It’s just that people deciding to rent and not buy, is not a factor affecting rents).

      • Or to put it another way – right now in Sydney, sales volumes ARE falling and rents ARE falling.

        Case closed

      • sisyphusMEMBER

        Leo, you made the exact same comment the other day in a separate thread – and it was rebutted. Me think you are trolling….

    • As soon as you start to look for a new place, if you take Shannan Whitney’s comments at face value.

  1. “The apartment on O’Neill Street in Guildford sold for $450,000 even though the owner wanted $489,000. He bought the home for nearly $483,000 at the peak of the market in 2015.”

    Expensive exercise, thats a +10% loss when you include stamp duty.

    • More like 15%. Which is likely how much deposit they put on it being their entire wealth. So 100% loss.and he is one of the lucky ones.

    • More like 23%

      Purchase price = $483k
      Stamp duty on purchase = $24k ish
      IO loan @5% over three years at 90% LVR = $69K
      Mortgage protection insurance = $8k

      Sold for $450k
      Selling costs: 2% commission = $9k
      Marketing = $7k
      Rates, insurance, maintenance body corporate = $15-20k

      Total cost of ownership $137k

      Rent (if it was rented or imputed rent if occupied) = $70k

      Loss on sale $33k
      Net ownership cost (loss) $67k

      TOTAL LOSS $110k

      Genius at work

      Pass the popcorn

      • Wino ShinyfaceMEMBER

        Does marketing cost 7k? That’s insane, big losses ahead when you factor everything thing in which Domain likes to ignore

      • May actually have been a 5 year old (so many parents have bought for the kids to get FHB).
        And negative gearing, saved 40% of the loss.
        Still telling everyone how good it was.
        But in Inner West Sydney the old rubbish 2 brm flats are down at least 10 %. Another 40 % down till they get to what they are worth though if rent was to be 5% of price…instead of the 2% net yield still now…

    • Might have been a first home buyer so using the stamp duty exemption. Even still has dusted equity. The question is how much.

    • Whats crazy is that this is an example of the bottom end of the market.
      Have a think about the 35 year old with 2 kids who bought a 800k house in Guildford.
      Or what about the “young affluent family” who bought a 1.5m apartment in the eastern suburbs at 7-8x LTI

    • SupernovaMEMBER

      At that price, probably the original purchaser (current vendor) is a first home owner, so delete the stamp duty. Next purchaser could also be a first home owner, so also delete stamp duty…..but not told!

      • In 2015 there was no stamp duty exemption. Might have been a 10 or 15 grand handout if new.

  2. Rents are falling. But landlords costs are staying the same or rising. Net yields are stagnant or falling.

      • You laugh but…
        Temporarily making capital losses tax deductible from ordinary income (ie negative gearing but for capital) could help the market clear faster and find a more normal price level.

      • Yes, but that’s not really the issue. NG is really just a way of minimising the short-term losses a person has agreed to incur because they believe they will eventually realise a capital gain that exceeds those losses. If there is no prospect of a capital gain, NG simply slows the rate at which your “investment” bleeds you dry.


    • But landlords costs are staying the same or rising

      I’d guess it won’t be all that long before the rate that a handyman can charge to do basic repairs begins to fall.

  3. Wino ShinyfaceMEMBER

    a 2 bedroom box in Guildford should at no time, ever, in any sane persons head be worth $483k or even $450k

  4. alwaysanonMEMBER

    Not a fall but my landlord in inner west Sydney was clamouring for another year at the same rent like 2 months before or term was up. First time that’s ever happened to me.

    • Our landlord sacked the agent who, in his words, “added nothing” and kept the rent at same level. It’s been same for three years and almost no chance if increasing in this climate. I think landlord is also pretending that he lives here to get a lower O/O loan rate, as his mail is still being sent to us. Exciting times for savvy investors!

      • Managing the property yourself is always a great money saver until something needs fixing.
        ps if any of that mail looks like it’s from the government in any way, ‘Return to Sender – not known at this address’ is a good option. Bin for the rest.

    • plebngineerMEMBER

      Same happened here for inner west. We were there a year and they were ringing two months in advance to resign the lease at same rate. I pushed to continue as a rolling contract and they lost their shit, missus wanted to resign again… A month after we had a property valuator in looking at the place, guess they borrowed more!

  5. reusachtigeMEMBER

    Marginal. All part of the usual cycle before the next boom. Great buying opportunities though!

    • Will only be an opportunity for those with capital. Everyone else is underwater or worse.

      • C.M.BurnsMEMBER

        “rental yield” ? You’re not really talking Reusa’s language there. It’s capital gains or bust. Which I believe is also his number plate

    • But you sprout that property always goes up! Seem to be gradually changing your tune however. Dumb, stubborn and wrong unless you define the cycle as one that is played out over decades.

      • Arguing with Reusa is like arguing with your own genitals… as far as they’re concerned everything is looking up.

  6. “Sydney and Melbourne property price falls could have a long way to go before bottoming out, with a “fear-of-missing” out mentality in the market becoming a “fear-of-not-getting-out” anxiety.”

    Don’t worry – domain is onto it. Getting FONGO (fear of not getting out) into the vernacular so as to keep the listings volumes up!! FONGO – that will fix the thing!

    https://www.domain.com.au/money-markets/fomo-to-become-fongo-in-a-falling-property-market-20180806-h13l8z-756589/?utm_campaign=featured-masthead&utm_source=smh&utm_medium=link

    • It’s been an almost overnight switch it seems for the media denying there was a bubble to now saying it’s all blowing up. Even domain…. I guess they don’t care, commission in a rising and a falling market. Scumbags.

    • “Fairfax-Nine-Lives” (the Domain alley cat) has no morals as Paul Keating advised recently. They will have some young hack writing spruik articles and a young fresh-face next to the on-line marketing trying to get FHBs in to a ‘buyers market’. I hope the young kids dragged into such ‘journalism’ know that such evil will follow them for a very long time in their career. Once you’ve sold snake oil in a cheap suit it’s hard to be taken seriously for the rest of your days.


  7. “In the past you couldn’t leave until a tenant was found but now people will break the lease, pay the penalty and still be in a better position after finding a cheaper unit,” he says…

    Rents would have to be falling very quickly for that to be true.

  8. Those are very different vacancy rates then what people have been used to. Looks like Perth going into its 30% price decline.

  9. kiwikarynMEMBER

    I wonder how much the recent legislation restricting AirBnB lets is affecting the rental market. Such a joke to think that they implemented the new rules in order to increase rental availability, when it turns out there is no shortage after all. What will happen in 6 months when the 180 nights have all been used up and the property is forced to stay empty?

    • Simple. They won’t enforce the legistlation. Like they don’t enforce money laundering, foreign buyers, etc..

      • This legislation is a bit different, in that there are thousands of people who live in close proximity to AirBnB apartments who are likely to take their own legal action if the legislation is not enforced.

    • I don’t believe the new rules had anything to do with renters (who they care absolutely nothing for) more it was squealing from hotel industry and NIMBY’s who hate party houses. I suspect it did have some effect though, because rental vacancies in popular tourist areas like Eastern suburbs have shot up. But could also be that hotel rooms have also increased significantly as supply response to tourism boom.

      One other comment on tourism “boom” is that while numbers are strong, average spend is falling, so perhaps not staying so long, or a shift in composition to South Asians, who perhaps don’t spend as much.

      • kiwikarynMEMBER

        One thought I had about NZ local governments taxing AirBnBs out of existence is that all the holiday homes get taken off the market. This will have an impact on domestic tourists – if you cant hire a bach out in your local holiday spot, you’re probably likely to take your money and go to Bali or Fiji instead. NZ/Australia are expensive holiday destinations – forcing locals to use hotels is likely to send them internationally where their money goes a lot further (like a 5* Hilton hotel in Bangkok for $125 a night).

  10. Falling rental demand is easily fixed by increasing the skilled immigration quota to 400,000 per year.

    • Nothing easy about increasing immigration in the current climate. If there was, it would already have happened.

    • Forrest GumpMEMBER

      Gustav
      August 6, 2018 at 12:50 pm
      Falling rental demand is easily fixed by increasing the skilled immigration quota to 400,000 per year.

      Yep.
      Increase population from third world countries into a high unemployment area with high vacancy rates with falling house prices.

      There’s a place they tried that already. It was called Dafur

    • Unless the new arrivals bring money, unlikely, or borrow, no longer possible, that strategy will not increase the available pool of funds available to landlords

  11. Renters might be able to call the shots wrt Rent but that’s little comfort to the increasing number of Tenants that are seeing their Leases terminated on No_Grounds so that the landlord can reoccupy the property clean it up and dump it ahead of all the others with the same game plan.
    It’s high time for some serious reform to Tenant rights particularly in NSW! Even a simple move for a family can cost upward of $5K, if they are being forced to move every year than that equates to an extra $100/week meaning that saving a few dollars on the rent is of little significance if it comes at the cost of secure and ongoing Tenancy rights.

    • That’s true, but it’s a heap better than the same thing happening during a rising market which was far from uncommon.

      • Days of overlapping rents are over. Now it’s so easy to negotiate any lease start date up to a month or more from the apllication date.

    • SupernovaMEMBER

      Agree Fisho!….Further, what about if the property is out of lease and the investor landlord/s are facing an interest only reset and decide to sell whilst the tenants still occupy. The tenants are expected to present the property suitably for sale whilst being subjected to the humiliation of open houses every weekend until the property is sold; tenants can apply for a reduction in rent but the amount is up to the landlord something ridiculously low like $10/week, or no reduction in rent at all. Yes rental law clearly needs revision and in a situation like the above a 30-40% reduction in rent should be mandatory.

      • Oh yeah. I went through 6 weeks of humiliation, being a tenant in a rental property that was up for sale. Having to clean the place constantly, and then having the punters wandering through my bedroom. Some arseclown stole a bottle of my then partner’s expensive perfume.

        One of life’s regular shitful character forming experiences.

    • Ah yes, let’s make FONGO a thing…

      Then it’s saturation time… so even if they push it onto the “meerkat”, so will the others… it’s good luck from then downwards…

  12. “Over the weekend, The AFR warned that Sydney renters are facing a deadly combination of falling prices, rising rental vacancies and falling rents”

    How can “falling prices, rising rental vacancies and falling rents” possibly be “deadly” for renters?

  13. Rents in sydney will fall up to 50% in next few years.
    Some parts of Perth saw rents down by 30-40% without any real economic downturn (no significant rise in unemployment, population decline or significant fall of median income – just elimination of mining exuberance).

    Imagine Sydney after few 100k’s of temp immigrants and students leave, unemployment hits 10%, wages fall by 20% or more in most of BS sectors and another 100k empty units hit market.

    • Imagine Sydney after few 100k’s of temp immigrants and students leave

      IF that happened I can imagine that would help reduce the housing shortage problem.

      IF the developers also continue to build thousands of dogboxes and IF Chinese don’t buy them and leave them empty and IF immigrants stop coming here then rent for dogboxes should fall a lot.

      Do you think the rent for a decent house will also fall significantly?

      • Opportunity cost is a powerfill mechanism.

        Btw. What i described is just what happened in Ireland after the bust.


      • Do you think the rent for a decent house will also fall significantly?

        Seems highly intuitive that any fall in demand for units will be felt in the detached house space both in prices and in rents as the incentive for developers with deep pockets to pay over the odds for properties to later turn into apartments vanishes. Certainly seen in inner Melbourne – houses kept empty for years by developers to eventually turn into units. Taking a leisurely approach to turn it around is a great idea if the property is rapidly appreciating all the while – not so much it it’s going the other way.

    • Some facts for you, courtesy of the Irish.
      http://www.thejournal.ie/daft-report-dublin-grow-up-3237818-Feb2017/
      “In Dublin rents are now rising by 15% per year, the highest rate seen since mid-2014. Those same rents are now 65% greater than those seen at their lowest ebb in 2010. Perhaps more significantly, rents in the capital are now a full 14% greater than at their previous peak, seen during the pre-crash days of early 2008.”

      That’s a 31% peak to trough fall in Dublin rents, not 50%.

      In Perth it is only the fringe which really suffered rent falls – Mandurah and that (which is semi-regional) – and even then it was closer to 30% not 40%. http://sqmresearch.com.au/weekly-rents.php?postcode=6210&t=1 Kinda the same as Dublin!

      But yes, a 30% fall in rent would = crash in house price of the variety ‘we ain’t seen nothing yet’
      Still, I am not selling 😀

  14. Bob4presidentagain24

    Where are the new rules for rent where one only needs to pay 4 week rents instead of until they find a new tenant?

    • adelaide_economist

      NSW Tenancy Act? I think it’s actually 6 weeks rent payable if you are under half the fixed term lease expired and 4 once you are past half way anyway.

      • kiwikarynMEMBER

        That makes a fixed term tenancy pointless. Might as well only offer a monthly periodic tenancy. Why should the landlord be the only one bound by a fixed term?

      • kiwi karyn – landlords aren’t obligated either. they can terminate to move back in or sell.

  15. Like the saying goes, things happen slowly then very quickly. Seems the confluence of many factors might actually make this one the real deal. Gonna be a lot of tears.

  16. … Welcome to the real world …

    Vintage house ads show how dramatically costs have jumped in Sydney since 1965 | Daily Mail Online

    http://www.dailymail.co.uk/news/article-6030127/Vintage-house-ads-dramatically-costs-spiralled-Sydney-1965.html

    • Real estate guide from Sydney 1965 shows the huge difference 50 years makes

    • It shows houses available in Maroubra, Ashfield, Caringbah and Beverly Hills

    • The Beverly Hills house was for sale for £6,750 and described as ‘immaculate’

    • When inflation of 5.1 per cent a year is noted, this equals price of $179,744 now

    • A similar house is listed on the market today with an asking price of $1.32 million

    Life in Australia: Sydney (1966) – YouTube

    https://www.youtube.com/watch?v=vR1CU8NjGW0
    .
    .
    House prices fall by fastest rate in six years … Sydney Morning Herald

    https://www.smh.com.au/business/the-economy/the-worst-is-yet-to-come-house-prices-fall-by-fastest-rate-in-six-years-20180801-p4zuuc.html

  17. A Melbourne anecdote I was made aware of today. Tenants have been renting a house in the eastern ‘burbs for over 10 years. There’s been a nominal increase each year and new agreements were typically offered a month or so before the old ones expired. A couple of time the agent had to be prodded for a lease renewal but no pressure and everyone has been happy.

    This week tenant gets a call with 6 months of the current agreement to go. Talking up a higher than normal (but still acceptable) increase for the next agreement and trying to get it signed and in the bag. The effort of over-explaining the reason for the increase and getting an early renewal suggests something is going on in paradise.

  18. Housing prices & migrants are two of MB key topics.
    This outlines associations between the two in the migrant intake, dwelling usage, the rental market & house price outlook.

    Based on that, then a view of Australian property dwelling prices & rents is that there will be a clearer separation into 2 classes & usages of property.

    One (A) holding up in value & rental income, and the other (B) falling as outlined in the article.
    Leading to an acceleration of A acquiring part of B.

    A. foreign owned (directly or via a proxy) & migrant occupied & ‘migrant rentable’ dwellings – low end, modest ex Australian established units or houses in Sydney/Melbourne & now parts of Brisbane. Up.

    B. Australia owned & Australian occupied, mid to high end, artificially priced up by A, but now with values & rents falling. Down.

    And that separation is already happening.
    High end & middle range housing & new unit prices not suitable for high migrant occupancy density are falling, but older established units & very run down or modest houses in migrant friendly zones are holding up.

    The massive yield & cash flow difference, plus backlog of migrant demand * & their capacity to pay more & also tolerate lower living standards will further accelerate foreign acquisition & migrant occupancy of ex-Australian dwellings in Sydney & Melbourne, putting a floor under that part of the market.

    *as long as we have 4.6 million new migrants onshore in the last decade, 3.8 million in Sydney or Melbourne and over 3.1 million in Sydney or Melbourne being poor, unskilled, low or illegal income & having to rent in private shared accommodation.

    The cost of dwelling usage to a migrant guestworker in Sydney or Melbourne as a share of their income is much less than an Australian on average income in ‘normal occupancy’ usage.

    The migrant guestworkers have the numbers, a massive backlog & also excess income capacity to pay / for the foreign syndicates & proxies to acquire on any ‘dip’ even more modest & low end established Australian housing to convert into migrant only shared accommodation.

    CoreLogic analysis errors.
    The CoreLogic stats on property prices & rental income (yields) are sourced from the property Sale price & then the ‘declared or advertised rental income’.
    The problem is when a very large share of the market in rental property is sublet & the landlord does not ‘advertise’ or ever ‘declare’ that additional income.
    And that is tens of billions of rental income & yield being missed by the Corelogic analysis and statistics – as we will see.

    As a simple example : just gross figures.
    🔹$750,000 old 2 bed walkup unit in Broadway – Australian young family – father, mother & young child pay $500 rent week or 40% of the dad’s $1,250 average income – their maximum limit in ‘normal occupancy usage (2.9 or 3 per dwelling ABS).
    ➡️So that’s $26,000 a year & a 3.4% gross yield.

    🔸The same dwelling next door was bought by a foreign syndicate for $750,000 laundering in money via a proxy – and then let to a lead tenant, then sublet & occupied by 6 foreign students who each pay $190 or only 20% of their legal & illegal averaged income of $49,000 (Deloittes) for a room share.
    That is $1,140 a week, or $59,280 a year, but only $500 a week will be declared ($26,000 a year) and negative gearing claimed by the onshore or PR proxy – often living in, but not on the lease.
    The other $640 a week is collected as cash no tax ($33,280 a year).
    ➡️Actual yield $59,280 (8%) plus tax and NG benefits. More than double.
    CoreLogic miss all this, as they rely on advertised or declared rents.

    Legality.
    Any issues in the subletting arrangement ?
    The owner blames the real estate agent. The real estate agent blames the lead tenant (usually a transient ir fake ID anyway), wait a while & do it again.
    The proxy owner is usually living in the dwelling but never on the lease, but will collect the cash. This is why attempted building manager controls or council etc prosecutions in illegal occupancy fail.
    The syndicate will get at least 8% and a high cash return – to then buy another.

    It’s even more profitable & easier out in the Sydney western & south suburbs.

    Rents are about 20%-30% cheaper as you go out west for ‘Australian normal occupancy’ usage.
    But migrant sublet room share is much cheaper – up to a third cheaper ($120 a week for a room share) because many ex Australian old modest houses are being acquired now in migrant friendly councils no prosecutions – and a much higher migrant occupancy density of 8 – 10 per dwelling & thus cash yield & profit.

    $650,000 for a 2 bed plus sleepout fibro shack on a busy road, 10 migrants on TR or as Tourists working illegally paying $130 a week – $1,300 or $67,000 a year.

    Declare a lead tenant transient at $400 a week rent, the other $900 cash. 10% yield and even less tax paid, higher NG for the proxy and return for the syndicate.

    ➡️All legal, no building managers, told to do by Malcom & Lucy as ‘higher density & better use of our city infrastructure’!

    The scale and effect.
    🔻1.9 million new migrants in the last decade and most were of third world origin, arrived poor, unskilled. Some had capital, others access to offshore money to be laundered via them as a proxy.
    But collectively they have far less property ownership or equity (weren’t here when it was cheap) & income than an Australian average. (ABS).

    76% are in Sydney & Melbourne and of that 63% or two thirds ‘rent’. (DHA)

    So 900,000 rent in Sydney or Melbourne occupying (4-5 per dwelling, bigger & extended family, plus subletting to family & visitors etc) so at least 225,000 rented dwellings. Paying some $7 billion in rent, of which only $5 billion or so would be declared given higher & more transient overall occupancy.

    🔻2.2 million Temporary Visa holders (July 2018), over 80% are unskilled & of third world origin (incl one third of NZ SCV non NZ born), and 93% rent, with 86% in Sydney or Melbourne.

    So 1.75 million ‘rent’ in Sydney or Melbourne, occupying / 6 per dwelling some 291,000 dwellings.
    Paying some $14.5 billion in rent of which only $8 billion is declared. (Legal v illegal occupancy ratio).
    This is the big elephant 🐘 in the room.

    🔻440,000 illegally working Tourist Visitors, 5% of the 8.8 million tourist arrivals, the legal ones also massively chew up private rental accommodation, but putting that aside – 410,000 of these are tourist illegals in Sydney or Melbourne consuming some 70,000 dwellings (6 per dwelling.
    Paying some $3.4 billion in rent of which only a fraction at best $1 billion could be declared -/- these are illegal workers with fake Id in visa breach.
    Another 55,000 overstayers- same.

    So in just Sydney & Melbourne the PR, TR & TVWI consume at least 570,000 dwellings as renters, pay some $25 billion in rent, of which only $15 billion is declared, or able to be declared as its illegal usage or illegal occupants.
    $10 billion missing – $7 billion being the TR in their now standard high density sublet cash in hand ‘room & bunk share’.

    And so CoreLogics input figures are way out by $10 billion or so. A 20% error on the Australian total private accommodation rental income.

    Which means they miss the clear separation into two types – A migrant or B Australian normal dwelling usage & thus the real income and trend projection.

    A. Foreign owned & migrant high density low end modest Australian housing esp in migrant friendly enclaves will hold up in cash flow, massive backlog & demand & very high cash flow value and this will further accelerate to acquire B.

    B. High end & middle & Low end Australian owned & Australian renter occupied, or new units with building occupancy controls, artificially inflated by A, but has hit limits in Australians confidence in property & their ability to pay mortgage debt or rent in normal occupancy usage & is crashing.

    ABS references here.
    ABS do have the overall picture, but no detail – as no foreign landlord or proxy was ever going allow their illegal & sublet tenants fill out their census details or who they pay rent to – the ATO & others mining the census data would be all over them.

    That’s why 1.3 million citizens & PR are missing and the 2.7 million migrant TR/TVWI boycotted / ignored the Census. However the ABS later did some top down assumption to add the 1.3 million missing & the TR to average out Australia dwelling usage, occupancy density & rent paid. So I refered to those.

    • Saw this. Look at what a million gets you there vs in western Sydney! (Even adjusted for forex)

  19. The AFR warned that Sydney renters are facing a deadly combination of falling prices, rising rental vacancies and falling rents:
    Huh? Sydney RENTERS or INVESTORS? Methinks renters will be far better off.