Will Rent Keep Going down?

yummypinacolada on 20/08/2020 - 03:29

I noticed that during these 2 months the rent have been reduced drastically (at least in Sydney where I live). For example I have been paying $350 p/w at the moment, but the same room in my building have been advertised for $250 p/w now. Even at that price, the room have been empty for ~2 months. Also I've been inspecting some places in the city area, most of the places I inspect still can reduce their rent by ~10% of their advertised price if I try to negotiate. I remember last year I inspect some places around city, and most REA asked me to offer higher price than advertised because the competition is tight.

Now my contract is about to end in a month time so I'm looking to sign a new lease. Do you guys think its a better to sign a long term or short term lease? Do you think this downward trend in rent will continue till next year?

I'm hoping to get some opinion from renter and tenants here. Also I'm wondering what's the renter strategy to cope up with this issue?

Part of me feels happy as I can pay much less now, but I also feel bad for the landlords whose main income are from renting properties.

Home & Garden

Comments

  • trustnoone on 20/08/2020 - 05:14
    +2

    My guess (which could be wrong), is pricing will stay fairly even, may reduce a bit in the next few months depending on whether NSW gets more or less covid counts.
    It may reduce a little bit more, though I don't think too much as its fairly low by near the end of the year, as people start to save for christmas, families leave capital cities for uni/study breaks to stay with families and I imagine most of the international students have gone home. Usually there's a lul here in work as well, so I also imagine people staying in, and work being difficult to find? Thus people looking for cheaper places to stay.

    I imagine into the new year though, things may ease up and increase? depending if universities will start offering on campus learning or if they'll stay largely digital.

    • yummypinacolada on 20/08/2020 - 13:50

      I'm not so sure if things will ease up by early next year. International border was planned to reopened on July next year, but that was announced before 2nd wave happen in Melbourne so it might get further delayed to late next year or even longer

  • Hardlyworkin on 20/08/2020 - 06:55
    +1

    Supply and demand. It depends on the particular area you are looking. If it's somewhere that usually has a lot of international students then may continue to soften. In September I think rental relief is due to expire. I think in a month you should be in an even better position to negotiate. You may be able to get it cheaper if you lock it in for 12 months. It's anyone's guess how things will look next year.

    • yummypinacolada on 20/08/2020 - 13:55

      I live in the city area. I guess no one can predict the future during these uncertain times.

  • twww on 20/08/2020 - 07:00
    +12

    "…but I also feel bad for the landlords whose main income are from renting properties."

    Worry only about yourself.

    Have no sympathy for those who put themselves in such a position.

    Take advantage of any opportunity available cus you bet your ass they would do the same.

    • brendanm on 20/08/2020 - 08:02
      +4

      It's a doggy dog world

      • 87percent on 20/08/2020 - 08:26

        snoop?

        • [Deactivated] on 20/08/2020 - 10:38

          Gloria

      • Almost Banned on 20/08/2020 - 11:30

        Sorry, what?
        What does that mean?
        Is that a quote from somewhere?

        • brendanm on 20/08/2020 - 11:49
          +2

          You haven't seen it before? Sayings like that are a diamond dozen.

    • dizzle on 20/08/2020 - 09:29

      Have no sympathy for those who put themselves in such a position.

      I understand what you're saying, but the same could be said for someone renting. If they can no longer afford the rent, it's them that put themselves in that position.

      ie it's through no fault of their own that they lose their job/hours/wages and can't afford the rent. Just like it's not the landlords fault that the renter can't pay the rent so they can't pay the mortgage.

      Not all landlords are in the same position and not all landlords are the big bad wolf living off those that can't afford their own house.

      • SalamiArmi on 20/08/2020 - 09:59

        The difference is that the renter that can't pay rent will also be struggling to pay for food and other necessities. Everyone needs a place to live, so renting isn't a choice for many.
        The landlord that can't pay their mortgage has made a bad investment. There are many ways to safely invest your money. If they chose to invest their money and it turned out at a loss, they don't have anyone to blame but themselves.

        • bohn on 20/08/2020 - 12:48
          +1

          The landlord that can't pay their mortgage has made a bad investment.

          Tenant that can't afford their rent.. perhaps they need to go into a sharing house? Move an hour out of town? Nah, too much work/hassle. They want to rent where they are, only CHEAPER haha.

          • SalamiArmi on 20/08/2020 - 13:49

            @bohn: You can say all of the same about the landlord in this scenario. Why don't they just stop eating so much avocado toast?
            I wasn't even talking about personal responsibility though. I'm saying I'm immensely more sympathetic for someone who has trouble paying rent than for someone that gambled on an investment and lost.

      • twww on 20/08/2020 - 10:24

        @ dizzle

        The landlord can always sell their IP!

        So they will always almost be in a better position than most renter's.

        Let's not shed too much of a tear about their predicament.

      • bohn on 20/08/2020 - 13:05
        +1

        agreed. as mentioned - if someone cannot afford the rent they can consider their circumstances. Are they living alone? Perhaps look to share with 2-5 others in a share house to lower the cost of living. Are they living in a nice suburb that is close to everything and therefore fairly expensive? Well look to move an hour out of town and travel in on the train. But no, most tenants want the nice property in a nice location (and not a share house). If so, pay for it. If you can't afford it, perhaps you have champagne taste on beer money. Look to adjust. This is no different to first home buyers who cannot afford much - they do not get their ideal suburb straight away - sometimes they buy a long way away from where they really want to be just to get something. Why should renters who can't afford their current rent be any different?

        • yummypinacolada on 20/08/2020 - 14:01

          Although I mostly agree with you, but living further away from the city might actually increase the overall cost if you work in the city. During these times most rent price have been reduced greatly but public transport rate still stays the same. That's another ~$60 p/w.

          • bohn on 20/08/2020 - 14:30
            +1

            @yummypinacolada: In that case a city share house is probably the cheapest option. But everyone would need to do their own calcs based on the rents in their area, public transport costs, etc. A lot of people might just assume it's more expensive to catch transport without actually researching available rentals in other areas and doing that extra bit of research.

  • Presence on 20/08/2020 - 07:21
    +2

    Your should ask your agent to go month by month for $250 per week. If they refuse then move to the other one in your building.

    • yummypinacolada on 20/08/2020 - 14:09

      Month to month is a no go for me, the REA told me I would have to sign 6 months lease minimum if I want to extend. Also all places I inspect that accept month to month lease are in very bad conditions.

      But in saying that, so you think that the downward prices in rent will continue till next year?

      • Presence on 20/08/2020 - 14:30
        +3

        Your REA is bluffing because he knows you're too chicken to leave. Tell him you want month to month or you are leaving. Who knows what rents will do but that places YOU in the position of power.

  • ihbh on 20/08/2020 - 08:01

    in my building

    where is your building? near the CBD, a university?

    if so, S > D and rents will be weak until international travel resumes for tourists, foreign students.

    only have anecdotal evidence people prefer houses to apartments in this environment, so if you like living in an apartment, then bonus for you.

    • dust on 20/08/2020 - 08:37

      Yep, depends where the building is/what type of accommodation it is

    • yummypinacolada on 20/08/2020 - 14:12

      I live near CBD, that is 30 mins walk to Townhall station or 5 mins with train.

      But do you think this trend will continue until international border reopen?

  • askme69 on 20/08/2020 - 08:15

    The Industry Groups are already applying more pressure than uaual on the Government to increase Immigration and more Handouts, so the biggest PONZI scheme on earth can continue.

    We have ruined this country all for a certain parts of the Population to make money on Property.

    • Diji1 on 20/08/2020 - 11:18
      -3

      Which is your fault if you voted Labor or Liberal.

      Have fun being homeless because you voted to privatise housing. You will join the hundreds of thousands of homeless that existed prior to the virus arriving. Or the 20,000 households that got disconnected from their electricity supply - in one three month period - in one state (QLD) - again, before any additional financial stress due to the virus.

      Fourteenth wealthiest nation on Earth.

      • brendanm on 20/08/2020 - 11:50

        Yes socialise housing! I went to live in a Soviet bloc apartment with all my comrades!

        • xinyi on 20/08/2020 - 11:58

          Look at how well Singapore has implemented their public housing estates before you talk!

          • brendanm on 20/08/2020 - 13:21
            -1

            @xinyi: Oh yes, I can't wait to be crammed into a crappy apartment with no room and no yard, surrounded by thousands of other people in close proximity. My dream come true.

            • xinyi on 20/08/2020 - 17:52
              +1

              @brendanm: No one forces you to live in public housing!

              If you have money Singapore has plenty of luxurious penthouses and townhouses to enjoy. Public Housing is an affordable and safe option for people who can't afford more expensive places to live and it works, unlike the crap situation with real estate in Australia.

              • brendanm on 20/08/2020 - 17:54
                -3

                @xinyi: Yes, I would love to pay even more taxes to fund some slums.

                • Love a bargain on 21/08/2020 - 02:27

                  @brendanm: Perhaps you should find out more before you speak.

                  Grant that they don't come with back/front yards but apartment units in Singaporean public housing estates are actually pretty spacious (both internally and distance between buildings) in comparison to apartments in Australia.

                  They are no frills (e.g. no fancy front entrance) but they are by no mean slums. They are built by the government and sold to citizens/PRs at subsidised/ not-for-profit prices with strings (e.g. minimum occupancy period, resale/ rental restrictions) attached.

                  When the borders re-open, you might want head over there and see it for yourself.

  • Seraphin7 on 20/08/2020 - 08:50
    +1

    Do you guys think its a better to sign a long term or short term lease?

    This is ultimately a question of the risk level you are comfortable with. You're currently paying $350 and say equivalent arrangements are available at $250. You say you could probably get this other arrangement at a 10% discount to $225. Let's assume that is all feasible.

    You then need to determine would you be comfortable locking in at $225 for the long term, noting that over that time rents will do what rents do (might go up, might go down, might go sideways). Or would you be more comfortable taking a shorter term lease at that price point, again noting that at the end of the lease rents might be higher, lower, or the same?

    • yummypinacolada on 20/08/2020 - 14:14
      +1

      I guess no one could predict the future in these uncertain times.

      • Seraphin7 on 20/08/2020 - 14:20

        That's the real issue here. The future is very uncertain in both directions. You need to make a decision you are comfortable with … and then live with it!

        There are any number of financial/lifestyle decisions we need to make in our lives. Some work out fantastically, others don't. They key is to work out what level of risk you are prepared to take on and then be comfortable with decisions you make within that profile. Part of that decision making and living with those decisions is to accept that with the benefit of hindsight, you will often not have made "the best" decision … but if you operate within your risk profile then you will find that the decisions you do make are usually good, even if not "the best".

  • vikvance on 20/08/2020 - 09:32
    +1

    Do you think this downward trend in rent will continue till next year?

    No one knows.

    Two scenarios:
    (1) A reliable long-acting Covid vaccine is developed by the end of this year & is rapidly distributed to everyone in the world. Borders are fully reopened & flights resume as normal. The world goes back to what it was before. The economy improves and rents go up.

    OR

    (2) The virus is too strong & is able to continue mutating to evade vaccines. Any vaccine that is developed is very short-acting (protects for only a few months) and/or very expensive. The virus continues spreading & borders remain shut. The continue continues tanking and rents keep going down.

  • [Deactivated] on 20/08/2020 - 10:11

    Most of these 'corona bonanza' deals are just face value, and theres no real discount available imho

  • mskeggs on 20/08/2020 - 10:12

    Hard to see how demand can fall further with no international students and lots of Airbnb now on the longer term market.
    I would personally take the longest lease you can get, perhaps offering to sign for longer for a discount.

    • yummypinacolada on 20/08/2020 - 14:16
      +1

      Its not as simple as you think, some landlords believe that by early next year rent will start to get back to normal. So some don't want me to sign a 12 months lease or ask for higher price if I want to sign a 12 months lease.

  • forrester on 20/08/2020 - 10:19

    Would there be any possibility of seeking a reduction of rent for those who have only just signed a 12 month lease a few months ago, who are now seeing equivalent properties seeking up to 25% less rent?
    Unfortunately for them, choosing to end the lease to chase cheaper rent would end up costly with reletting fees, and having also to cover rent for quite a while until a new replacement tenant signs up etc.

    • Seraphin7 on 20/08/2020 - 12:07
      +1

      I appreciate there are government programs, etc., etc. and I'm not fully knowledgeable about those. If a tenant falls into one of those categories then they can pursue that to the fullest extent.

      But outside of the above, while there's always a possibility to negotiate, but you need to consider both perspectives.

      All else being equal, why would a landlord who has leased the property to you in good faith suddenly drop the rent? For every $ they give back to the tenant, that's another $ they need to find from somewhere else … or just go without. The fact that the market has shifted since the tenant signed is interesting, but not much more than that.

      If rents were to suddenly rise, would it be "acceptable" for the landlord to seek an increase in rent from those who are committed to a lease?

    • yummypinacolada on 20/08/2020 - 14:18

      I'm afraid not, just like Seraphin7 said. You need to consider the scenario if rent market price suddenly goes up, would it be fair to increase your rent? I can feel your frustation as I've been paying a lot more that I should these past 4 months.

  • duchy on 20/08/2020 - 10:24

    This is dependent on where you live and what the vacancy rates are.

    Southbank in Melbourne or West End in Brisbane have massive vacancy rates - 16%.

    That's a renter's market and you can dictate the price.

    If you rent a house in the suburbs (let's say Strathpine, which has vacancy rate 0.5%!) your rent will rise. If not this year then next year for sure.

    In your situation (apartment in CBD) I would expect vacancy rates to hover around 12-15% for a long time (until students return). It's a great time to push back.

    • yummypinacolada on 20/08/2020 - 14:21

      Yes, I live close to CBD. You'd be surprised most places here have reduced their prices by 30% or more compare to last year.

      • duchy on 20/08/2020 - 16:14

        I am not surprised at all.

        The inner urban unit markets of Brisbane and Sydney are being badly impacted but the most affected is Melbourne. Unit rental vacancies in Melbourne CBD have doubled in the last three months to more than 3,500. Property managers such as Apartments of Melbourne have returned 90% of their managed apartments to their owners - empty.

        Every day that they do not have their place tenanted they lose money. As I mentioned - this is great time for you to negotiate a lower rent.

  • tsunamisurfer on 20/08/2020 - 10:46
    +1

    OP don't be concerned about the Landlord.

    Market forces have benefited both sides at some time, there was a time where the rents were high and people were fighting each other for a place.

    Now its the other way,

    You do what is best for you and negotiate the best deal you can.

    The market forces almost always comes up with the right outcome.

  • Drakesy on 20/08/2020 - 10:48

    It's a strange market at the moment. There's overall downward pressure on rents at the moment due to the state of the economy HOWEVER this is not necessarily the straightforward case.

    In Perth, rents have been subdued for a long time now, we're seeing an increase in rent prcies over covid due to demand. I believe this is due to home buyers not wanting to jump into the housing market due to uncertainty/the downward trend hence increasing rental demand. But there are many variables at play.

    I believe Sydney's inner city apartment rents are plummeting due to massive oversupply and falling immigration. (Perth's immigration's been stagnant for a while now). So i feel as long as the country's in lockdown, rents will continue to fall in Sydney and Melbourne at least.

  • bobwokeup on 20/08/2020 - 22:46

    Well in WA there is a shortage of rentals so I don’t think prices won’t go down. It all depends on supply and demand even even these trying times.

  • Ghogger on 21/08/2020 - 06:31
    +2

    This is a question I came on here to ask myself before seeing your thread.

    Our lease expires today, and our landlord flat out refuses to negotiate a lower rent. We live a in 2bd/2bth/2car apartment in Darlinghurst paying $1000/week. The market has definitely shifted towards houses and away from apartments.

    There is no way our landlord will find another tenant for $1000/week but she’s being stubborn - so we’ll happily move out and let her lose money through a vacancy period etc.

    We’ve been looking for the past 3-4 weeks and found a few great places 10-15% cheaper that are equivalent - however the demand in certain areas is still quite strong and renters are outbidding each other for good places (impatient and anxious people!).

    We have started looking towards neighbourhoods where foreign students would normally reside, principally the new towers in darling square. Most Australians wouldn’t think of living here, however the apartments are actually really nice, spacious, good views, nice facilities, and darling square is a great place to hang out.

    The apartment we are currently looking at was previously rented for $1000/week to Chinese students who got stuck in China and can’t come back (all of their furniture got stuck here too, sad story). There are 30 or so apartments Available right now in the same building. They are asking $850, we offered $750, and they countered at $780 which we are considering accepting.

    Below $750 the owners would be losing quite a bit of money relatively to mortgage repayments and strata/council rates, so I think most landlords would try to hold out for a bit longer than rent much below this level.

    However the future is looking bleak for landlords in this area, given that most people aren’t looking at moving INTO the CBD, and international students will be stuck overseas for many months to come..

    • yummypinacolada on 21/08/2020 - 15:45
      +1

      You experienced the exact same situation as me(I live in Darlinghurst as well). My landlord refuse to reduced the rent and ask me to pay the same amount if I want to extend. I'm not sure what's in my landlord's mind, he has 3 other rooms here which have been vacant for ~2 months at the reduced price but he refuse to extend my lease if I want the same price with the other rooms(all rooms are equal in price before).

      I decided not to extend my lease, and I'm glad I did. Its their loss. I found a much better studio apartment near Townhall advertised for $400, but we finally agreed with $350. I signed up for 1 year lease, not sure I make the right decision if the rent in CBD in keep going down in the next few months.

      How long is the lease that you signed up for?

      • Ghogger on 21/08/2020 - 16:25
        +1

        6 month lease offered at $750 in the end, or 12 months for $780.

        There is a risk either way that the market could go up or down. I think we will go for the 12 month option to avoid the hassle of potentially moving in only 6 months if they ask for a much higher rent once the contract is up.

        I think you made the right choice - because of strata, interest repayments, council rates etc., I can't imagine your rent decreasing much further than the $350 you're paying.

        Well done in sticking it to the greedy landlord and going through with the move!

        • yummypinacolada on 21/08/2020 - 19:38

          Thanks.

          I would choose 6 months lease if I were you. I don't think the rent will increase significantly before the international border reopen. Just my opinion.

          • Ghogger on 21/08/2020 - 20:06

            @yummypinacolada: I wanted to go 6 months too but the Mrs wanted the security of a 12 month lease.
            Happy wife happy life 😁

    • Flowerbomb on 23/08/2020 - 11:33

      Since you prefer apartments, have you tried central park? A quick search for chippendale on realestate.com reveals many properties for rent there. The ball is in your court. Lots of apartment investors are in mortgage stress. I would go for a short term lease if I were you. If the owner disagrees, walk away.

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