22 March 2005

Insane Canberra Rents - Again

| johnboy
Join the conversation

The Canberra Times has a story on the ridiculous, vertiginous heights the ACT rental has risen.

While I’m glad VG’s graft and thrift are being rewarded I do have to wonder if this is the best possible way to run a society?

Join the conversation

All Comments
  • All Comments
  • Website Comments

Problem with getting rid of negative gearing, is the most likely under supply of rental properties drivinmg rental even higher. I’m not a fan of negative gearing myself, but if you got rid of it, there’d be a mad rush to the stock market and other forms of investment.

Negative gearing. Get rid of it.

Holden Caulfield9:43 am 27 Apr 12


Just under a year before this thread started we paid a crazy mid-400s (“Gee that’s expensive” were the words most used) for an original 3 bedroom home in the inner north.

To be fair, things have definitely slowed in the last year or two. But, yes, in another 7 years from now I dare say today’s prices will seem dirt cheap. Well, cheap maybe.

devils_advocate8:47 am 27 Apr 12

Holden Caulfield said :

poetix said :

The first link doesn’t go to the story.

I’m guessing it probably did 7 years ago.

LOL. Back in 2005, everyone was telling me not to buy a house, because prices were crazy and the market was about to crash. People were whinging about the insane rents, but assuring me they were still better off than buying, because renting was cheaper and the difference could be invested for a higher return in other assets.

Today, the repayments on that house (including capital repayments) are far less than the net income it generates (rent minus expenses).

Nothing ever really changes. I look forward to revisiting this thread in 2019.

Rents are one problem, but interest rates and propery values are the reason behind that. If you’re charging $150/week in rent, that works out to 5200 per year.

If you have a property valued at 250k with a loan for that amount, youre looking at approx 1250pm in interest. If you borrowed half the value of that property, the interest drops to 600pm.

This means if you have half the cash upfront and were prepared to charge 150pw, the rent would break even with your interest payments. If you didnt have the cash upfront, then 300pw would almost cover your interest payments. This is only interest, before any other property expenses such as rates, taxes, maintanance, etc.

Its a bit hard to be criticising an investor for wanting to charge enough for rent that theyre not making a loss.

The problem of high rents is a side effect of over-inflated property values. The other ‘problem’ with these high rents, is that tennants are still willing to pay these amounts, or they move elsewhere that they can afford.

Also, look at a property that someone pays $400pw for compared to a property someone pays $50pw for.. which tennant is more likely to look after the property, the one who can afford 400pw or the one who looks for the 50pw in rent?

Holden Caulfield said :

poetix said :

The first link doesn’t go to the story.

I’m guessing it probably did 7 years ago.

Jeez, the vodka is making me all Russian and slow. But I’ll win in the end, you’ll see…

Holden Caulfield11:23 pm 26 Apr 12

poetix said :

The first link doesn’t go to the story.

I’m guessing it probably did 7 years ago.

The first link doesn’t go to the story.

The Traineediplomat9:59 pm 26 Apr 12

heheh context….

Interesting looking at this again in the context of today’s prices…

Hey, your pitiful lives would be very dull without us Eurotrash!

i cant believe teh ridiculous prices people pay for ‘apartments’ or ‘flats’ as i first knew them.

i can understand how selling my place and paying an extra 100K to live in a place half the size and ten floors up is a really great idea.

A look at yesterday’s new rental listings on allhomes shows the $300 a week average is about right, even though there’s a fair mix of suburbs with property available. I did notice they’re mostly 2 or 3 bedroom homes, which probably doesn’t help young singles new to Canberra.

I think the cause of Canberra’s high rent is simply not enough rental property available. If there was more property out there, rents would drop in accordance with market forces.

Well perhaps if people stopped paying top dollar for the priviledge of living nearest to their favourite cafe or pub ala’ Eurotrash, we wouldn’t have this problem.

High density housing has a habit of artificially inflating housing markets, both rent and pricewise… add to that a reitiring population keen to build a nestegg,a very mobile (both upwardly and well travelled)and cashed up generation keen to enjoy themselves before settling dow, younger population and you have a problem.

Daily Digest

Want the best Canberra news delivered daily? Every day we package the most popular Riotact stories and send them straight to your inbox. Sign-up now for trusted local news that will never be behind a paywall.

By submitting your email address you are agreeing to Region Group's terms and conditions and privacy policy.