How to succeed in renting a home in Canberra?

thatsnotme said :

This may all be true from a purely financial point of view, but if your primary reason for buying a home is to live in it with your family, there are a whole heaps of non-financial benefits that come with home ownership.

I just don’t think that you can boil down the decision between buying and renting to a purely dollars and cents argument.

This is true, renting a house and owning a house are not perfectly substitutable. No doubt a lot of people highly value the things that are exclusive to ownership. Just in Canberra at the moment you will pay a hefty premium for those things.

Quoting: “The median monthly rent for houses in Canberra is $1950 ($450 a week) and the median price of houses in Canberra is $566,000. Say the average mortgage rate is 7%. The major factor then becomes how you think rents and house prices change over time. If house prices are stagnating or falling, then renting becomes the better choice, even in the long term.”

I’m always very cautious about using statistics to explain situations. The comparison above is flawed. I have just been through the whole rent buy thing and I can tell you, the kind of house you’d buy for $566,000 would be more than $450 per week in rent (try $600 to $650 per week) and the kind of house you’d get for $450 per week in rent would sell for around $450,000 – which it did.

Also if house prices stagnate but rents continue to go up, then renting in the longer term does not end up the better option.

arescarti42 said :

Fair enough argument. If you’re looking at the tradeoff between buying and renting, look at a calculator like this http://www.nytimes.com/interactive/business/buy-rent-calculator.html (or others if you want). The median monthly rent for houses in Canberra is $1950 ($450 a week) and the median price of houses in Canberra is $566,000. Say the average mortgage rate is 7%. The major factor then becomes how you think rents and house prices change over time. If house prices are stagnating or falling, then renting becomes the better choice, even in the long term.

This may all be true from a purely financial point of view, but if your primary reason for buying a home is to live in it with your family, there are a whole heaps of non-financial benefits that come with home ownership. What price do you put on the freedom to do whatever you want to do with your home? The security of knowing that your landlord isn’t going to decide to cash in their investment, and sell the home from under you? And in this case, the ability to have pets without needing someone elses permission first.

I just don’t think that you can boil down the decision between buying and renting to a purely dollars and cents argument.

Or go regional. Goulburn is only an hour away, and you can still get a nice little 3 bedder bungalow for <$300K. You'll want a good late-model car, preferably a cheap little hatchback that runs on the smell of an oily rag, and you'll need a new set of tyres earch year. But lots of other things – schools, childcare, services, dining, cinemas, vets – are much cheaper than Canberra, so it all evens out.

@arescarti42:

Thanks for the response, soime good, thought provoking points.

The issue of rents increasing is based purely on my opinion, and relates more to stock located inner city and inner south than the outlying suburbs. I’d put to you that stock in the inner areas is more resistant to price drops due to higher demand. If it were my money, I’d searching for something in an outer suburb, and put in a number of lowball offers to see how serious sellers really are.

In terms of the buy vs rent thing, the argument works well until you get to a point about 25 years in, at which point you stop paying the loan entirely (because you own the property). If you are very disciplined and can consistently invest the difference between the cost of renting and buying, you will likely end up ahead in the very long run (although I don’t know anyone that has actually doen this successfully).

Anyway, I guess we’ll find out in time what happens.

jayskette said :

Apply as a couple then when you get the property sneak in your kids and dogs.

They just followed me home, what was I to do!

We rented when we first came to Canberra. It was awful! In Sydney we had always got any property we wanted, due to really, really good references. In Canberra we carefully selected the house we thought would be best and were shocked when we were rejected. And again. And again. It was horrid. In the end we ended up with a private rental, which I normally avoid like the plague. But we got in. We were there for a while and we moved out into something better when we didn’t have the time pressures.

I suggest just hang in there. Apply for everything, even if it’s something you’d not normally consider. Also, as someone else suggested, sometimes pets will be considered by the owner, so check with the agent, and ask them to check with the owner.

Good luck!

Classified said :

I suggested buy, because renting in Canberra is expensive, and is likely to get even more expensive in the short term, partly because of the cost of building new stock here.

I appreciate your opinion Classified, but it isn’t supported by the data. Over the last 12 months rents for houses in Canberra didn’t even keep up with inflation, and in the last quarter they dropped by 2.1%. http://www.domain.com.au/content/files/apm/reports/APM-September-RentalReport-FINAL.pdf, for those who don’t believe me.

Classified said :

When you buy you are locking in your buy price (and loan), and can start paying down a mortgage. For a family home, I wouldn’t have thought short-medium term price appreciation would be a big issue. Bear in mind that once you have an asset like property, inflation starts to work for you, by putting upward pressure on the nominal value of the asset while putting downward pressure on the real value of the loan. Over the longer term (15+ years) this brings significant benefits. That rent might look good now, but in 5 years you will likely be paying more to rent than buy if you bought and locked in your loan repayments. Interest rate rises won’t amount to much over the next several years either.

Fair enough argument. If you’re looking at the tradeoff between buying and renting, look at a calculator like this http://www.nytimes.com/interactive/business/buy-rent-calculator.html (or others if you want). The median monthly rent for houses in Canberra is $1950 ($450 a week) and the median price of houses in Canberra is $566,000. Say the average mortgage rate is 7%. The major factor then becomes how you think rents and house prices change over time. If house prices are stagnating or falling, then renting becomes the better choice, even in the long term.

drfelonious said :

particularly given that the inquiry was about renting, not buying.

Ahem…

Alternately should we put our own lovely home on the market and look to buy in the ACT?

drfelonious said :

Classified it is a bit much to suggest I have an ‘axe to grind’ when you are out and out trying to sell the poor newbie to Canberra on buying a house – trying to look after your investment property perhaps, or maybe a real estate agent?
I am doing no more than add some balance, particularly given that the inquiry was about renting, not buying.

As for your “doubts” about whether the public service will be cut back heavily, I have to say I don’t share those doubts given that the last two Coalition governments elected after an ALP government defeat have severely cut back the APS. Look up Malcolm Fraser and razor gangs if you are too young to remember the 70s.

Even if – as you say – the best case scenario of stagnating house prices were to play out it would still be a terrible idea to buy a house as you would just be renting a big chunk of money (paying interest) to buy a non-appreciating asset.

Clearly we have differing opinions. I am not a real estate agent, but I do own investment property, in the ACT and elsewhere. And before the usual cries of ‘negative geared’ and ‘scared of price drops’ are heard (not necessarily by you of course) neither applies to me.

I suggested buy, because renting in Canberra is expensive, and is likely to get even more expensive in the short term, partly because of the cost of building new stock here.

When you buy you are locking in your buy price (and loan), and can start paying down a mortgage. For a family home, I wouldn’t have thought short-medium term price appreciation would be a big issue. Bear in mind that once you have an asset like property, inflation starts to work for you, by putting upward pressure on the nominal value of the asset while putting downward pressure on the real value of the loan. Over the longer term (15+ years) this brings significant benefits. That rent might look good now, but in 5 years you will likely be paying more to rent than buy if you bought and locked in your loan repayments. Interest rate rises won’t amount to much over the next several years either.

FWIW, this is just my view, and clearly yours is different. That’s fine, but let’s not understate the difficulty in finding and keeping decent rental accomodation in Canberra at a time when many sellers would be happy to negotiate in order to make a sale.

Classified it is a bit much to suggest I have an ‘axe to grind’ when you are out and out trying to sell the poor newbie to Canberra on buying a house – trying to look after your investment property perhaps, or maybe a real estate agent?
I am doing no more than add some balance, particularly given that the inquiry was about renting, not buying.

As for your “doubts” about whether the public service will be cut back heavily, I have to say I don’t share those doubts given that the last two Coalition governments elected after an ALP government defeat have severely cut back the APS. Look up Malcolm Fraser and razor gangs if you are too young to remember the 70s.

Even if – as you say – the best case scenario of stagnating house prices were to play out it would still be a terrible idea to buy a house as you would just be renting a big chunk of money (paying interest) to buy a non-appreciating asset.

drfelonious said :

My goodness there is a lot of spruikers on this site for buying a house

Especially considering the title of this post is “how to succeed in renting a home in Canberra”.

I wonder if they are owners getting nervous about what is happening in most other Australian capital cities.

drfelonious said :

My goodness there is a lot of spruikers on this site for buying a house. Let me try to add some balance to this thread – here goes: Canberra house prices are at astronomical grotesquely inflated bubble prices the likes of which have never been seen before and likely won’t be seen again for generations.

According to Allhomes the optimistic vendors in this town seem to think that $650000 for a crappy old ex govvie 3bd 1bath houses is the going rate for Woden. That equates to a mortgage payment of $900/wk again according to Allhomes. The rent on a similar house would be around $530/wk, again according to Allhomes.

Alternatively you could buy a crappy old ex govvie 3 bd 1 bath house in the wilds of Belconnen for maybe $150 or so a week more than the rent on the place but of course you would then be stuck paying $450000 for a crappy old house with a commute. Before you do that though you might want to think about how much that “450k” house might be worth after Tony and Joe start cutting 12000 public service jobs and everyone in this town wants to get out at the same time.

Fair enough to add an alternative view, in my experience people who use the term ‘spruiker’ often have an axe to grind.

Even if the public service is cut back heavily (which I doubt), look at what happened when the public service was cut back in the 1990s. Property didn’t crash, it simply stagnated for nearly a decade.

The argument about whether property really is as badly overpriced as you suggest has already been had on this forum.

My goodness there is a lot of spruikers on this site for buying a house. Let me try to add some balance to this thread – here goes: Canberra house prices are at astronomical grotesquely inflated bubble prices the likes of which have never been seen before and likely won’t be seen again for generations.

According to Allhomes the optimistic vendors in this town seem to think that $650000 for a crappy old ex govvie 3bd 1bath houses is the going rate for Woden. That equates to a mortgage payment of $900/wk again according to Allhomes. The rent on a similar house would be around $530/wk, again according to Allhomes.

Alternatively you could buy a crappy old ex govvie 3 bd 1 bath house in the wilds of Belconnen for maybe $150 or so a week more than the rent on the place but of course you would then be stuck paying $450000 for a crappy old house with a commute. Before you do that though you might want to think about how much that “450k” house might be worth after Tony and Joe start cutting 12000 public service jobs and everyone in this town wants to get out at the same time.

Apply as a couple then when you get the property sneak in your kids and dogs.

wildturkeycanoe said :

Buy. For $490/week, you’d almost be paying off a 3 bedroom 1 toilet established home, instead of paying off someone else house. Rent is dead money, end of story.

Comments like this one illustrate the astonishing financial illiteracy of a lot of Australians.

Rent money is dead money in exactly the same way that interest on a home loan is dead money. Rent is what you pay to use someone else’s house, interest is what you pay to use someone else’s money.

In the ACT, for the same house, the interest you pay on the mortgage (that is without actually repaying anything back) is almost certainly going to be considerably more than renting that house.

Classified said :

I always find it interesting when people say ‘the housing shortage myth has been debunked’, as there sure isn’t an excess of rental accomodation in Canberra!

There are currently 1405 residential rental listings on allhomes alone, that doesn’t sound like a shortage to me. There is an extreme shortage of “affordable” housing though (i.e. housing that doesn’t take up any more than 30% of household income).

http://www.allhomes.com.au/

Agree that maybe just a bit than $490 a week would get you a mortgage. We pay $1035 a fortnight on a pretty decent sized mortgage. Then you need not worry about your dogs!

Buy. For $490/week, you’d almost be paying off a 3 bedroom 1 toilet established home, instead of paying off someone else house. Rent is dead money, end of story.

Whilst it is true that many landlords are opposed to pets, it is quite common practice to simply not state whether or not pets are allowed when advertising a property, so only rule out those places that specifically say “No pets allowed”.

Landlords are interested in good tenants. Often that means families and with families come pets. Many landlords will consider pets on a case-by-case basis. It will mean lots of application forms but you have to meet the market.

If you follow Holden’s link and search for 3BR up to $490 there are over 100 returns – it includes Queanbeyan. If you find the “pets allowed” button in features, that number reduces to 5.

http://www.allhomes.com.au/ah/act/rent-residential/advanced-search/view?regionId=391

Add max $490pw and 3 bedrooms in the Advanced Search and knock yourself out.

agree, buy

Renting in Canberra has to be the worst.

Firstly, I didn’t think $490 p.w. was too much for ask for a 3 bedder. Secondly, we only want one bathroom! And thirdly, our dogs live outside where they belong. I find it maddening to believe that some renters would let their animals dirty up other people’s houses (although having had a cat in the past I can perfectly understand how this could happen). We don’t want Queanbeyan because we want to take advantage of the excellent public education and free preschooling in the ACT. I will ask DH to contact a few agents direct and check out a few more places before we give up on renting.

Buzz2600 said :

Herein lies your problem. Canberra has a housing shortage, extremely low vacancy rates and lots of permanent high-paying rental customers.

Maybe you should start looking in Queanbeyan.

I always find it interesting when people say ‘the housing shortage myth has been debunked’, as there sure isn’t an excess of rental accomodation in Canberra!

Queanbeyan is a good option. There are lots of options to rent 3 bedroom homes for around $450 per week, and many will have nice sized yards.

FioBla said :

>My question is to those with kids and pets who have succeeded in find a rental is how did you do it and how long did it take?

Can’t remember. But at least 10 inspections. And at least 5 applications. These are the ones I can remember: I’m sure it was more than those.

Allhomes; that’s all. Their search is really good. They also have an email feature that worked. You can filter out all your above criteria: $490, pets, house, # bedrooms. As you’re not fussed about living *anywhere* in Canberra, that’s a big plus.

I stopped bothering with apartments early on; there was only tiny chance of them being pet-friendly.

Calling to try and organise a viewing before the main one can also be a good strategy to make yourself noticed. Just come up with some excuse about being out of town when the open house is on and could they please show it to you before. That’s how I ended up getting my current house though it was a private rental.

>My question is to those with kids and pets who have succeeded in find a rental is how did you do it and how long did it take?

Can’t remember. But at least 10 inspections. And at least 5 applications. These are the ones I can remember: I’m sure it was more than those.

Allhomes; that’s all. Their search is really good. They also have an email feature that worked. You can filter out all your above criteria: $490, pets, house, # bedrooms. As you’re not fussed about living *anywhere* in Canberra, that’s a big plus.

I stopped bothering with apartments early on; there was only tiny chance of them being pet-friendly.

From what I can see, $490/wk is reasonable for a 3-bed 2-bath house in the outer suburbs (Holt, Macgregor, Gungahlin, Condor, etc). You’ll be heading over the $500/wk mark for places a suburb closer in though (e.g.: Evatt, Spence).

Then there’s the difficulty with pets, as has been mentioned on RiotACT a number of times many landlords are reticent to accept pets since there are an increasing number of people in the renting community who have allergies to animals. You just cannot get cat or dog hair out of carpets, and you end up having to recarpet the place.

Pedrose said :

Hi Blub. We are not fussy where it is and it the max we are prepared to pay would be $490.

Herein lies your problem. Canberra has a housing shortage, extremely low vacancy rates and lots of permanent high-paying rental customers.

Maybe you should start looking in Queanbeyan.

Sorry – I think you’re problem might be you’re asking for too much for too low a price. Hence the high competition in that price range.

Good luck though!

Hi Blub. We are not fussy where it is and it the max we are prepared to pay would be $490.

A couple of people I know have had luck by offering to pay three months rent in advance up front or offering to pay a higher weekly price. Download the forms off the websites, complete the application before the inspection and hand it to the agent on the day. Get two or three amazing written recommendations and submit those as well – they never ask for them but it makes it easy for the real estate agent to forward them on to the owner for approval.

Good luck!

Pedrose said :

What I meant to say is, does land tax apply to a home owned as your principle place of residence or just homes owned as investment properties?

No, Land tax is not payable on your PPOR, just on investment properties.

Where are you looking, and how much are you looking to pay for rent each week.
I might know a guy who knows a guy … who has a 3br, 2 bathroom house in Belco coming up. pet friendly.

Will post agent details if you’re looking in that area around the right price.

What I meant to say is, does land tax apply to a home owned as your principle place of residence or just homes owned as investment properties?

Thanks Guys. Git, what is the land tax situation?

Due to the land tax situation in the ACT and global economy yadda yadda yadda, lots of people are trying to sell off their rental investments.

I’m selling mine simply because I can’t afford a second mortgage that is negatively geared as well as pay land tax. A tax that is used for…………. something, I don’t know what service it gives me as a landlord on top of what rates already give me. I swear, its like doing business with the underpants gnomes.

So yeah, buy. I’ve had to drop thew price after two weeks.

Buy. Prices have softened a bit, and there are plenty of sellers who’d be happy to negotiate.

Pets and renting in Canberra don’t go well together unfortunately. My only suggestion is to keep looking now, because come January, all the new public service recruits appear and then you will have no chance.

Buy. It’s a good market for you right now – lots of houses, few buyers – that’s what I heard on the TV last week anyway. I came to Canberra with Mr Cholet in 2004 and have loved being here ever since. Now have a Cholet sprog as well – great place for kids.

So your next question will be – “where should we buy?”. But no need as it’s been asked so many times before…just search RiotAct.