That makes 2008 a tough year for tenants (as if readers of the Brown Couch didn't know already). But let's consider a couple of qualifications. First, APM's figures relate to 'asking rents' (and to give credit to APM, they make this clear) which APM gets from 'to let' advertisements. These are the rents that persons entering into new tenancies might expect to pay. They do not relate to the rents that tenants in established tenancies pay. 'Established rents' are lower than 'asking rents', for several reasons:
- 'asking rents' reflect that the landlord has, in many cases, just given the premises a coat of paint and made other repairs;
- because of fixed term agreements, 'asking rents' also reflect that the landlord won't be able to increase the rent for six or 12 months;
- 'established rents' reflect the discount that landlords tend to give tenants who are a known quantity, as opposed to unknown new tenants (this isn't out of the goodness of their hearts; it is putting a price on risk).
Secondly, not only is the dollar amount of 'asking rents' higher, their rate of increase has recently been higher too. The Consumer Price Index (CPI) from the Australian Bureau of Statistics (ABS) reports on movements in rents, and its data crome from established tenancies. The most recent CPI report is for the September quarter: according to it, Sydney rents were up 1.8 per cent for the quarter, and 7.5 per cent for the year.
The next CPI report is due out next week: we'll see what it says about rents then.
hi chris,
ReplyDeletei just added the brown couch to my blog (highnoonsaloon.blogspot.com).
unlikely to be much crossover... but you never know.
Dangerbird (aka the inaugural winner of the golden, albeit dead, rabbit.)
Surely 'asking rents' are also not always achieved. No doubt there are some landlords motivated by greed who are kidding themselves about what people are prepared to pay. There are certainly stories about of overpriced properties having to be let at below their ambitious 'asking price.'
ReplyDeleteThat's a good point, Julia - and one that's also made by Dan on his blog at Bubblepedia:
ReplyDeletehttp://www.bubblepedia.net.au/tiki-view_blog.php?blogId=4
On the other hand, sometimes the asking rent is lower than the actual rent, because of a so-called 'rent auction' - that is, where one or more prospective tenants bid up the price.