Construction still not satisfying existing demand as rental prices rise

By 14 January, 2011 7

The ABC brings word on continuing rental price rises as the ACT continues to fail in taking real action on housing affordability.

“Canberra has one of the nation’s leading employment rates, it’s down around 3.3 per cent, so we have a full employment economy for all intents and purposes,” he said.

“Also we have a significant underlying accommodation shortage in the capital and solid income growth – all these things combine to put upward pressure on rentals.”

Dr Wilson says it is unlikely there will be any reprieve for renters in the coming year.

“With increased economic growth, that will only tend to tighten the rental market in Canberra. Construction, although improving in the nation’s capital, is still not sufficient to satisfy the existing demand,” he said.

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7 Responses to Construction still not satisfying existing demand as rental prices rise
#1
Chop711:06 pm, 14 Jan 11

Still cheaper to rent/buy here than Sydney. People nowdays expect a McMansion (and a McMansion loan to go with it) rather than making do.

#2
georgesgenitals1:28 pm, 14 Jan 11

Land is not being released at an appropriate rate, and it costs too much. Of course, ACT gov gets a substantial % of revenue from land sales, so they don’t want to jeopardize this.

There are also not enough builders, and too many of the builders here are crap (private certifiers and ACTPLA I’m looking at you).

This is a problem that will take some years to work through.

#3
random1:58 pm, 14 Jan 11

Chop71 said :

Still cheaper to rent/buy here than Sydney. People nowdays expect a McMansion (and a McMansion loan to go with it) rather than making do.

You can buy a flat in central Sydney for the same price as one in Turner.

#4
wildturkeycanoe3:12 pm, 14 Jan 11

For those who think it’s cheaper to rent or buy here than in Sydney, do some research. Quick look at an internet real estate site and the cheapest 3 bedroom in Sydney is $250/week. You can’t get anything in 3 bedroom in Canberra fro under $350.
To buy in Sydney suburbs, 3 bed for under $200,000. A.C.T properties start around $350,000+.
Granted, the Sydney suburbs may require commuting, but so do people from Yass/Bungendore and they are not in Canberra. Land in A.C.T seems to be getting more costly, but smaller as well. This works exponentially to increase the cost to the buyer and “affordable housing” is just a joke. To afford a house in Canberra requires two incomes generally [unless your exceptionally well paid] yet they expect you to live with only one car parking and no backyard. The system sucks, but thankfully the Labor government gave me the finance to get my own home a year ago. This, after 10 years of renting and not being able to save a cent thanks to $300-$400/week rental figures. I feel for all you who want a home but can’t afford it. It’s nearly enough to drive you out of Canberra like we did, just to save some $$$$ and then come back to buy.

#5
Chop713:31 pm, 14 Jan 11

…are you taking into account the lower unemployment rate and higher incomes here in the ACT. With unemployment at 3.3% it’s quite easy to get a 2nd job

#6
arescarti429:55 pm, 14 Jan 11

There are two things that are worth pointing out from this ABC article.

The first is that unemployment figures can be misleading, in addition to people finding jobs, people giving up looking for jobs also reduce the unemployment rate.

The second is the actual size of the rent increases. In Canberra, rents increased by 4.5%. Keeping in mind that inflation over 2010 was about 2.8%, this means that real rents increased by 1.7%, or by about $7.8 a week on the average $460 a week house.

It’s not to say that rents weren’t expensive to begin with, but the increase really isn’t particularly huge.

#7
JC6:53 pm, 15 Jan 11

arescarti42 said :

It’s not to say that rents weren’t expensive to begin with, but the increase really isn’t particularly huge.

Except of course when every year has the same increase, whereas wages don’t grow that much. So over the course of 4-5 years the gap in real terms ends up being quite large.

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