Landlords Save but Renters Squeezed

Once again, the media has recognised the ideal economic environment that investors are currently enjoying.
The severe undersupply of investment properties has resulted in median prices per week rising, whilst interest rates (& therefore outlays) have been slashed.

Real Estate Institute of Queensland chairman Peter McGrath agreed the interest cuts were unlikely to lower rents. “There is still high demand & short supply & in the foreseeable future I can’t see that equation changing,” he said. But he warned Landlords not to make housing completely unaffordable.




Landlords save but renters squeezed
By Kathleen Donaghey

Gold Coast rents are expected to continue rising despite four successive interest rate cuts which have saved landlords an average $525 a month.

Real estate agents and tenant advocates have warned that demand for housing continues to outstrip supply while investors, spooked by the financial crisis, are holding on to their money or selling up.

Meanwhile, the local Tenant Advice and Advocacy Service has been flooded by 1000 people unable to keep up with high rents and other problems.

Advocacy co-ordinator Julie Bray said some investors had been selling their rental homes, further depleting supply, while tenants were losing jobs or working hours.

Ms Bray said despite the rate cuts, some rents had been pushed up significantly and she feared prices were going to continue rising because of demand.

“In Queensland, the cost of rentals is dictated by demand and that’s going to worsen with the financial crisis because people are putting their properties on the market to recover income lost from super,” said Ms Bray. “There’s definitely a lot of financial stress. People are falling into arrears and we’re trying to maintain tenancies.”

The latest September quarter figures show the median weekly rent for a three-bedroom unit on the Coast is $360, which increased from $330 last year and $300 from 2006.

The median rent on a three-bedroom house is now $390 a week, up from $360 last year and $335 in 2006.

Real Estate Institute of Queensland chairman Peter McGrath agreed the interest rates cuts were unlikely to lower rents.

“There is still high demand and short supply and in the foreseeable future I can’t see that equation changing much,” he said.

But he warned landlords not to make housing completely unaffordable.

“Rent increases are no necessarily good for the investor because if you push rents over the realms of affordability then the tenant will move out,” he said.

“The biggest issue with landlords on the Gold Coast is unemployment.

“My members have to be conscious when giving advice to landlords to balance the economic circumstances on the Gold Coast.”