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Rents still too high

By johnboy - 4 August 2009 34

The ABC has a piece on the high rental prices in Canberra.

    The report by the ACT Shelter organisation says the rental trap is putting pressure on the public housing sector as people leave crisis accommodation.

    The report found the ACT has Australia’s highest proportion of people leaving crisis services and going into public housing at 34 per cent. That is compared to 14 per cent nationally.

    The Territory also has the lowest rate – at 12 per cent – of people going into private rental from crisis services. That is less than half the national average.

    Jeffrey Dalton from ACT Shelter says more people are becoming stuck in crisis accommodation leading to a shortage of emergency housing.

    Basically without a household income over $70k it’s not viable. So we all cram into share houses and say thankyou for a room and an argument over who cleaned the kitchen last.

    But hey, smug boomers can bore us all with talk of their real estate wisdom thanks to the good fortune of having been born before they had a chance to screw everything up. And that’s the really important thing.

What’s Your opinion?


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34 Responses to
Rents still too high
Ryoma 10:23 pm 04 Aug 09

What’s that ringing noise? Oh that’s right – the bell that rings for thee, Boomers.

Our housing market is the greatest Ponzi scheme this country has ever seen. I earn around the average wage and do not have an extravagant lifestyle, but would not buy a house at present, especially with the First Home Mug’s Bribe (sorry, “Owner’s Grant”) inflating the market.

But I am OK with waiting, because those prices are on their way down very soon – I give it 2 years to fall further and harder than the USA or UK.

Why? The papers would have us believe things are rosy again. This despite German authorities refusing to “stress test” their banks for fear of what they will find, an Australian Government looking for triggers to hold an early election ahead of chickens coming home to roost, and America and much of Europe in the same place as Japan has been for 20 years.

What happens when you cut interest rates and no-one spends because (a) they fear for their jobs and the future and (b) they are so deeply in debt it makes no difference to them? Where does economic demand arise from then?

Our first wave of our Baby Boomer generation have just passed 65. Many have lost much of their super, and they will not be spending up big. Others of this generation will lose their jobs – ditto. Within 10 years many Boomers will need nursing care they cannot possibly pay for, and when they do, they will try selling their houses for what they think it’s worth.

$500K? My generation can’t afford that – bank manager will laugh me out of his office (and naturally, he or she is a Baby Boomer). $350K – yes, this will buy me a poorly designed dogbox miles from anywhere. I’ve waited for a while, why would I buy that? After all, the house prices are going to keep falling.

$200K – that’s more like it, because interest rates have gone through the roof to pay for government stimulus packages worldwide. I can afford this – just – as my real wages have been cut to pay enough tax for the Baby Boomers health care.

But that’s OK. I can buy all over Canberra, or other cities now, because it is a massive fire sale. And the truth shall be revealed – any asset is only worth what the market will pay for it at any given time.

Bring on the future – I am investing offshore in countries with better demographics.

Dazzlar 5:32 pm 04 Aug 09

We’ve been advised that our rent is to increase from $350 p/wk to $370 p/wk, is that reasonable do you think? We live in Bonython. Would it be too cheeky to try and negotiate a smaller increase? How would I word the letter?

arescarti42 5:30 pm 04 Aug 09

kumadude said :

Hi Jim,
I understand that realestate prices MAY seem high, but that is life.

….no, real estate prices ARE high, Australia has the lowest level of housing affordability of all the English speaking OECD countries, average house prices here are almost 7 times the average household income, compared to 3-4 times average household income in the US and Canada, which is roughly the income to house price ratio the boomers experienced when they were buying their family homes. High prices aren’t just “life”, they are a result of retarded government policies.

kumadude said :

Instead of complaining about Canberra rental costs, why not move to a place you can afford…sounds economically rational to me.

And where exactly might that be? Outback NSW? A caravan parked off the federal highway?

kumadude said :

Or, maybe reduce your lifestyle to match you weekly earnings.

Hmmm, what part of my “lifestyle” do i cut back on first, food or bus passes to get to work?

Kumadude, you are a TOOL.

chewy14 5:22 pm 04 Aug 09

pepmeup said :

Houses are affordable in Canberra, people just ahve to lower the expectations. we cant all move straight into a four bedroom ensuite house in the inner north. get on the ladder and start climbing, buy a cheap town house in a far north or south suburb save hard and pay as much off as you can. so no nights out on the town or fancy dinners. then in a few years 3-5 sell and move up the property ladder.

Sounds suspiciously like a Pyramid scheme to me. I always thought they were illegal?

RayP 5:19 pm 04 Aug 09

Perhaps part of the issue here is whether housing is primarily something that people need to live or whether housing is an investment opportunity to be bought and sold to make a profit.

Like for some people food is primarily something they need to live whereas for others it is something to buy and sell to make a profit.

The Australian housing market seems to work well for people who use housing as something to buy and sell to make a profit.

It doesn’t seem to work that well for people who basically want somewhere to live – housing costs a lot.

neanderthalsis 5:19 pm 04 Aug 09

There is a finely balanced equilibrium to maintain in order to have a property market that is conduicive to investment.

A shortage of property development means that house prices are too high, investors won’t buy, supply of rental properties falls, occupancy rates sit close to 100%, landlords can charge high rents. On the reverse side, if the supply of houses available increases too much, owner occupiers and investors buy, occupancy rates decline, rents start to fall, and investors become reluctant to buy again. Populations increase, pressure on housing supply increases, prices go up… Insert ouroboros reference here.

Just give it a few years, all the boomers will move down to Batemans Bay or buy hobby farms at yassand the market will level out.

Wraith 4:56 pm 04 Aug 09

kumadude said :

Dear johnboy,
“smug boomers can bore us all with talk of their real estate wisdom”.

What rubbish, boomers have lost nearly half of their retirement savings, interest rates and house prices are at extremely real lows.

If you do/did not have the discipline to save and take advantage of the current financial climate, then there is no one else to blame but yourself.

I am now 33, I made a summer last 15 years and yet I can still manage to scrape enough money together for a small flat in Queanbeyan, plus still maintain habits and addictions.

My pocket is saturated with urine.

House prices are at real lows???

You’re kidding……..

pepmeup 4:54 pm 04 Aug 09

Houses are affordable in Canberra, people just ahve to lower the expectations. we cant all move straight into a four bedroom ensuite house in the inner north. get on the ladder and start climbing, buy a cheap town house in a far north or south suburb save hard and pay as much off as you can. so no nights out on the town or fancy dinners. then in a few years 3-5 sell and move up the property ladder.

Every time I hear some one complaining about house prices it is usually at a resurant or out at a club, if you can be there then you dont want a house. why is tung and groove so popular, why because it is filled with “rent for lifers” complaining that they cant afford a house while drinking $8 beers

AngryHenry 4:24 pm 04 Aug 09

kumadude said :

i have almost doubled my savings by throwing it into shares when every other loser pulled out (thanks), I scored 8% term deposit rates before this. and, if you wish to purchase property overseas, this year is extremely cheap.

Ultimately, stop complaining and utilise the opportunities when they occur, don’t complain when you ignore them and miss the reward.

Good for you!

Your self righteousness makes me want to vomit.

kumadude 4:16 pm 04 Aug 09

Hi Jim,
my post distinctly focuses on the “boomer” remark.

I understand that realestate prices MAY seem high, but that is life….learn to live within the financial barriers defined by one’s salary. Instead of complaining about Canberra rental costs, why not move to a place you can afford…sounds economically rational to me.
Or, study harder so you can achieve a wage that best suits your lifestyle. Or, maybe reduce your lifestyle to match you weekly earnings.

“pull themselves up by the bootstraps”: why not, stop whining and start living.

In fact Jim, the “GFC” has actually helped: i have almost doubled my savings by throwing it into shares when every other loser pulled out (thanks), I scored 8% term deposit rates before this. and, if you wish to purchase property overseas, this year is extremely cheap.

the reason rentals have gone up is because of the first home buyers grant, so weight till the 6 months restriction is satisfied and all those low priced units will flood back on to the market. At around this time low priced property should collapse, due to the artificial stimulus being removed.

Ultimately, stop complaining and utilise the opportunities when they occur, don’t complain when you ignore them and miss the reward.

Jim Jones 3:50 pm 04 Aug 09

kumadude said :

If you do/did not have the discipline to save and take advantage of the current financial climate, then there is no one else to blame but yourself.

So despite all the statistics telling us that housing affordability is at crisis levels; that the rental market is at record highs and this has only been worsened by the GFC; that available accommodation in Canberra is extremely limited and this worsened by the high levels of people leaving crisis accommodation; and so on, you’re saying that all that’s really needed is for people to “pull themselves up by the bootstraps”?

VYBerlinaV8_the_one_ 3:39 pm 04 Aug 09

Friska said :

I moved back to Canberra from Sydney because I couldnt afford to live in Sydney anymore. Didnt I get a rude shock when I saw the rent down here!!

What I find frustrating is getting a letter in the mail just after your lease has expired stating the rent would increase by $30 per week. I sent my agent a “nice” letter and said I would pay an extra $10 per week fullstop. This was agreed by the owner, they didnt want to bother looking for someone else. So if you fight for your right, especially with rent increases, you may win.

You should always feel free to negotiate. A very similar thing just happened with one of my tenants, who offered to sign up a long lease in exchange for a smaller rental increase. I agreed, and figure it was win/win.

gonzodoc 3:06 pm 04 Aug 09

“But hey, smug boomers can bore us all with talk of their real estate wisdom thanks to the good fortune of having been born before they had a chance to screw everything up”

On the other hand they did manage to fully capitalize on being in middle management during the 80’s, I guess I would brag about that too.

Friska 2:54 pm 04 Aug 09

I moved back to Canberra from Sydney because I couldnt afford to live in Sydney anymore. Didnt I get a rude shock when I saw the rent down here!!

What I find frustrating is getting a letter in the mail just after your lease has expired stating the rent would increase by $30 per week. I sent my agent a “nice” letter and said I would pay an extra $10 per week fullstop. This was agreed by the owner, they didnt want to bother looking for someone else. So if you fight for your right, especially with rent increases, you may win.

kumadude 2:52 pm 04 Aug 09

Dear johnboy,
“smug boomers can bore us all with talk of their real estate wisdom”.

What rubbish, boomers have lost nearly half of their retirement savings, interest rates and house prices are at extremely real lows.

If you do/did not have the discipline to save and take advantage of the current financial climate, then there is no one else to blame but yourself.

I am now 33, I made a summer last 15 years and yet I can still manage to scrape enough money together for a small flat in Queanbeyan, plus still maintain habits and addictions.

My pocket is saturated with urine.

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