Desperate Offers to Attract Tenants
Hmm. It seems we have a problem. Rents are Going Down: Landlords Make Desperate Offers to Attract Tenants.
Desperate landlords are offering tenants up to four weeks free rent just for signing new leases amid a rise in vacancies and drop in rental prices.
The offers have followed a surge in new housing construction that oversupplied parts of Sydney with housing, with nearly one in 10 rental homes sitting vacant in some areas
Additional data from CoreLogic showed median advertised weekly house rents have fallen by an average of more than $100 in parts of the north shore, northwest and Sydney’s far west.
Vacancies
- Kellyville had the highest level of vacancies, with 9.2% of homes currently empty.
- In Epping, where developers have started a mass of unit projects for the opening of the Sydney Metro Northwest rail line next year, 6.6% of rental homes remain vacant.
- Gordon’s vacancy rate was 7.7%.
$1 Million Discount “Bargains”
Also consider Sydney’s Biggest Real Estate Bargains: Homes at Discounts of Up to $1 Million
Sydney’s cooling real estate market is delivering buyers hefty discounts that would have been hard to believe even six months ago.
A string of properties across the northern beaches, eastern suburbs and north shore are currently listed at up to $1 million below their original prices after languishing on the market unsold for months.
The deals have followed an 8 per cent drop in Sydney’s median home price over the past year and a 17.4 per cent lift in the number of homes listed for sale.
Compounding this, Sydney’s existing pipeline of new housing projects is forecast to increase the current supply of housing by 9.5 per cent over the next two years. And it’s all at a time when buyer demand is falling as purchasers struggle to get financing from increasingly cagey lenders.
Worse than Global Financial Crisis
Let’s round out our trio of Australia housing reports with this grim assessment: Real Estate Prices Drop at Fastest Rate Since Global Financial Crisis.
CoreLogic head of research Tim Lawless said he expected the current downturn to last significantly longer than the one recorded in 2008.
“Back then the market was hit by an economic shock but it quickly recovered because of heavy stimulus from government,” he said.
Damn!
What the hell happened to that big housing shortage?
And where the heck are the government and the Central Bank when you need them?
Wait a second. Didn’t the government and central bank combine to create this problem?
Mike “Mish” Shedlock
Here’s something else that’s being released quietly in the Australian MSM
Negative equity rising fast :
It’s estimated that 10% of current mortgages are under water. A few more percentage values drops will see this escalate to 20%.
Of course these figures only concern mortgages. Foreign buyers of inner city apartments who have paid full price are looking at a real drop in value and their initial investments are well negative.
Friends from Indonesia bought a Melbourne dogbox apartment for 850K AU dollars. They bought it off the plan in Jakarta without even coming to Australia to check real values. No Australian in their right mind would have paid more than 550K dollars for it. It’s current value is subjectively less than 500K if you could find a buyer.
In the Netherlands, 21% of home buying was by investors last year. Houses have risen more than 20% in price (year on year). The government actually pays for agencies to encourage this type of investment (because it makes everybody wealthier, they think). At the same time they have rent subsidies. The youth has been effectively priced out of the market. Waiting for the next unexpected crisis.
It’s government’s way of ensuring that only the dumb, dependent and pliant have access to any resources. Competent people intelligent enough to be able to produce actual wealth, are also intelligent enough to pose a threat to the idiotocrats, after all.
Waiting to see similar news in SF Bay Area!
The dumbest and luckiest people I know work in real estate.
Or live on the Pacific coast or popular cities where real estate has gone parabolic since the late 90’s and bought mostly in the 90’s and think they are investment geniuses
Down Under is finally learning that their very popular real estate investment strategy of “negative gearing” has something to with “high leverage” and “default ratio,” but in a bad way. Worse, an awful lot of Aussies put their retirement (SUPER) funds into negatively geared properties. Ouch!
The real panic won’t start until “jingle mail” sends the banks into a “tizzy.”
Short Westpac, ANZ, and CBA, or buy gold?
The “big four” will be in big doo-doo. As I recall, they are highly dependent on wholesale funding obtained from overseas sources.
Sure: short the Big Four, just like people suggested in 2010 (how did that work out?). And when you’re done with that, how about shorting JGBs? They yield, like, nothing! How long can that possibly last? Or, take a deep breath and consider that maybe, in the 21st century, causes no longer have effects the way they used to.
Two free months rent is equivalent to cutting the yearly rent price by 17%.
Having more than a 5% vacancy rate used to lead to bankruptcy
Most of these highly leveraged complexes will not survive.