According to SQM research, Melbourne’s rental vacancy rate surged 1 percent in December to a 6 year high of 4.4 percent as the city deals with an oversupply of residental property. There is now 16,000 rental properties sitting empty.
A fortnight ago, the Herald Sun reported on a rental glut in West Melbourne where the vacancy rate had hit 22 percent in the month of November. December’s figures show further increases with West Melbourne now sitting at 26.4 percent. New four bedroom, two bathroom homes are reported to be renting for $275/week.
The increases are not limited to Melbourne. In the Sydney suburb of Rhode, the rental vacancy rate is now 13.6 percent. Gordon is 8 percent.
» Melbourne full of empty homes – The Age, 26th January 2012.
» Rental vacancy rate an ‘ominous development’, says SQM – News Limited, 26th January 2012.
Something is not quite right, is it?
One of the good things about Australia’s property market being one of the last to falter, is there is an abundance of information out there from all the other countries where property crashed. For example, I was only reading today that in Ireland the bubble devastated the rental market where “the housing crash initally resulted in a huge expansion of rental offers. From 6,200 units in August 2007, the number of properties for rent rose significantly to more than 23,400 in August 2009.” Thats a big increase and I guess its happening here. In Australia, residential property started falling in December 2010, so we are now just over 1 year into the correction that sometime this year will be upgraded to a crash.
If you can’t sell at the price you want, what can you do? Rent it! The flood gates are starting to open.
I want to know what the media and spruikers will provide as an explanation for the sudden abundance of rental properties….
Melbourne’s skyline is festooned with cranes building multi-level appartment blocks. With the high number of surrounding-existing properties up for lease, there is no way known these appartments that are soon coming onto the market are going to find tennants.
Spells CRASH to me.
Yes, where do they all come from?
“If you can
AWD, I suspect it is coming from both sides of the supply and demand equation.
On the supply side you have all the holiday and empty investment properties up for sale. Developers are also off loading stock they can’t sell, rather than holding them.
On the demand side, I suspect there is a lot of consolidation. Youth unemployment is now 17.3 percent, so I would say much of our youth is either not leaving Mum and Dad, or moving back in with Mum and Dad. The casual retail jobs to make ends meet while at uni is far and few between. I would suggest as living costs continue to increase, there could be a rise in share homes too.
http://www.smh.com.au/business/young-workers-hit-by-rising-unemployment-20120124-1qevx.html
Tom, there has been an increase in share homes since a few years ago. This has been apparent in the area I live. Its’ not just with young people. There are people (people I know too) in share homes and units in their 40’s one nearly 50.
Unemployment + Underemployment (that require CentreLink assistance) is running at around 17% (give or take) and has been for a while.
The mainstream media is either lagging and catching on, or have been (and still are) incompetent, or have been told what to report by their sponsors.
Australia wasn’t the last country to falter. Credit and debt issuance gave people the impression “…we punched off the GFC…”. Just look at debt levels before and after, it is now a bigger propblem now than ever, meaning there was nothing good in the first place.
This blog post is about a train wreck many could see coming.
“Credit and debt issuance gave people the impression
I am about to emigrate to Sydney and I will have to borrow our $30k seed capital from my father-in-law to pay our first year’s expenses. Why? Because my savings in the UK will be decimated if I bring them over under the current exchange rate.
I have good, hard-earned money I WANT to bring into Australia to SPEND, but I can’t. Property prices are RIDICULOUS. LBS talks of “arrogance” killing the country. You’ve got that right mate. Talking to Sydney based estate agents is a joke. They are living in cloud-cuckoo land if they think we’re all so stupid as to blindly accept their greedy and massively over-valued property prices.
I’m going to have to rent for three years because I can’t get credit as a new arrival (even though my credit rating in the UK is impeccable). Even if I could get credit, the type of house my family needs in the city we want to be in will cost me at least $1.5m!
And to top it all, when everyone is worried about not being able to sell their properties, and becoming ‘accidental landlords’, they say ‘no pets’! I have two indoor pedigree cats, not a slobbering large dog! No Pets? Do you want to let your over-priced house or not? This is why there are 16,000 empty properties in Melbourne. These NIMBYs are more concerned about a little claw mark on a rug than they are about meeting their mortgage payments.
2012- the year Australia wakes up and joins the rest of the world. The party’s over folks.
Rupert, I completely agree with you.
Australia is a joke – I had to laugh with your comment ‘NO PETS’.
Are they taking the piss?
When the shite hits the fan will they be taking pets then.
Mate, my only advice for you is to wait.
Remember….
He who laughs last laughs longest (and I will enjoy it)
APM are reporting today rents to skyrocket!, great time to be a landlord!. Maybe in Darwin, but in Melbourne?
This housing issue is a beast that will linger for years, so no rush to buy into the hype.
The Feb 2012 RBA meeting will be the first chance for the banks not to pass on the full rate cut, sighting overseas funding pressure. Sucks to be in debt I guess.
Lucky we have the world’s BEST treasurer on the case. And remember – Its different here!
LBS, its’ not just arrogance that will kill this country, its’ also what stupid people in large numbers are capable of.
Rupert, ball is in your court, if you’re in a position to hold out do so, you’re winning.