Well funnily enough i just go my new rental agreement yesterday. I have lived in this unit on the beach for 3 years and rent was $300 a week when i moved in. In 4 years my rent has just gone up to $350 a week, the latest increase is $30. The unit is on the market next door for $400k. Body corporate is about $80 a week. I assume the people I rent off have a 300k mortgage.
Their current repayments would be around $500-$550 a week + body corporate so $580 -$630 a week.
I assume 3 years ago their repayments would have been around $450 - $530 a week.
So their repayments have risen around $130 a week whilst me rent has risen $50 a week. Then as you say another rate rise is coming soon and a few of the banks expect 2 rate rise this year and posibbly more independantly.
Within another 12 months their repayments will propbably have risen around $160 a week whilst my rent would have risen $50 a week over the 3 or 4 years.
There is only so much money you can offset via negative gearing unless you are on a massive wage.
Thats the reason why property listings are going up and up and up.
And on a side note 4 units have vacated in the last 3 months because the people living there couldnt afford the rent of $350 a week...they have all been filled but the owners had to drop the rents to keep some good tennants there from what they were asking. The other units were vacant briefly but are now tennanted.
I can honestly tell you people (especially most renters) can only afford so much. The best case for an investor is that they raise rents but the tennants will need to have someone fill the spare room etc. This means more vacant rooms elsewhere and more wear and tear.
Rents arent going through the roof where I live, sure they are rising but nowhere near most peoples mortgage repayments.
As i have stated many times a large piece of the buyers market comes from renters, be they first home buyers etc The more rents do rise the less savings these people will have to be able to afford to pay current house prices.
Once again demand falls and supply rises.
Its happening now pretty much right across Australia, you really need to take your blinkers off
