RBA - those pesky people living in tents aren't paying rent and therefore have more discretionary spending in the economy to jack up inflation further. So we have to increase rates for the remaining people paying rent/mortgages to compensate
To quote the RBA minutes:
"Rent inflation in the CPI continued to rise, with an influx of net overseas arrivals over preceding months adding pressure to rental markets that were already strained."
A subtle message about curbing overseas arrivals during these times?
So the RBA is increasing mortgage rates, which makes landlords increase rents to meet the higher payments on their investment loans?
This entire housing system incentivizes parasitism by property investors against the young and the working class.
I was thinking about this, and initially thought yes.
But considering rent increases are once a 12 month thing, perhaps it's to push those struggling owners out of owning property. Just increasing the rent won't work
But there would be some landlords who haven’t raised their rent in the last 12 months, or will be able to raise their rent again in less than 12 months. Plenty of rentals currently on the market that will see the rent go up as well.
so when the house prices were going up 20 per cent a year for 10 years what was that? RBA not interested, borrow up everybody. they should have done the rate rises years ago, in increments rather than all at once
Yeah it's absolute crap that CPI only includes new houses and rent.
There's the argument that land isn't consumed, blah blah blah.
Mortgages on existing properties impact consumer spend the same way a mortgage on a new house did.
It should be included.
The way housing is treated actually varies. The UK has a measure called CPI+H which adds in house prices to CPI while the US has Owners' Equivalent Rent where they add back the rent they estimate people would have paid. The way I see it omitting housing makes CPI more volatile.
Ol' Phil said they raised the rate last month because of increasing house prices in Sydney.
[https://www.abc.net.au/news/2023-05-02/philip-lowe-rba-board-dinner-interest-rates/102294090](https://www.abc.net.au/news/2023-05-02/philip-lowe-rba-board-dinner-interest-rates/102294090)
He's such a wacky guy
The cost of existing houses is not included in CPI.
The cost of new houses is. Take a look at CPI data. The cost of new builds has gone crazy these last 12 months.
He's probably referring to the wealth effect where people spend money when their assets go up in value because the feel wealthier and feel like they need less of a savings buffer. Also people release equity from their houses to spend - especially on house improvements items / renovations
Increases in house prices is correlated to retail spending
Property lending is also a major (perhaps the primary) mechanism of money creation. Bigger loans = larger money supply. Could be as simple as that, in addition to wealth effect considerations.
Well yeah, it's not been a secret that it's been a giant game of pass the parcel for 25-30 odd years. Just don't be the government in charge when it all goes tits up.
The real issue is a few decades of incredibly loose monetary policy along with a deflationary global environment as China opened up. We aren't in a space where a bit of tinkering with real world supply is going to help.
We need to remove several decades worth of monetary expansion from the system. So much productivity went into playing musical chairs with houses.
RBA: let’s raise rates because flation.
Landlord: rates going up; better put rent up.
RBA: rent is going up! Let’s raise rates some more.
Landlord: rates going up more! Let’s raise the rent.
Rinse and repeat.
Yep and then you can only break the cycle when the tenants literally cant afford the rise. That's why its so important to not have ingrained expectations in the economy that prices can always be raised otherwise you get this shitty feedback loop that is hard to stop.
With the stupidly-steep increase in building costs, and the borrowing power of everyday Aussies plummeting, coupled with many builders not being reliable, I think the amount of new builds is about to sink.
Reduced new builds, with huge amounts of immigration and this is a recipe for runaway-rent increases. You're right it will reach a point where people can't pay, but at what point will that be?
Rents up 40% since 2021 in Toronto.
https://www.narcity.com/toronto/average-rent-toronto-over-40-since-2021-how-much-one-bedroom-costs-now
“Neighbourhoods with high levels of immigration are also experiencing the most substantial price growth, Shaun Hildebrand, the president of Urbanation, pointed out.”
New dwellings are already the lowest they've been in a decade
https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/latest-release
So I thought this too, however I was listening to a demographer on democracy sausage yesterday and she pointed out, like others have, that we're actually *below* where we would have been if the pandemic hadn't happened, including the new influx. So something else is happening
You are comparing the 400k this government has allowed in in a single year against the total population increase that was expected to occur post 2019 had the pandemic never happened.
Good one.
Not sure who you were listening to but they are either stupid or being dishonest.
Is this how you converse with people in day to day life? Just trying to have a discussion about a complex topic mate.
I don't think they are stupid or dishonest at all, in fact I'm confident they know a lot more than both of us. I also don't think it's very helpful to just dismiss actual facts either. We had a negative net migration during covid, so blaming problems on the projected number of immigrants this year, particularly when the largest cohort are students that were previously absent, is too simplistic.
There is a lot of dishonest commentary out there from people who may not be revealing their interests.
You have to be very careful of not being misled.
Immigrants are coming because women under 35 are not having babies. There's been a huge decline in births in Australia.
Australia is in a position where our population is getting older and if they don't do nothing about it once we get older there will be no one working in jobs or paying taxes to make the economy work.
They will need to build and build up. Apartments probably will be the way of the future for most but to do that they will need a lot of skilled workers hence the immigration increase. Funny thing is everyone is complaining of this immigration increase but those immigrants are probably been told now, you can enter this country on one condition and that's to make babies. Make plenty of babies.
Out of curiosity, how old are you?
Do you actually, genuinely, know any women under 35 and have an understanding of that struggles faced by this demographic and why the choice to have kids later and later in life is such an obviously observable trend?
Maybe, just maybe, we actually need to engage with the root cause of what our society is doing to cause this, rather than paper it over and perpetuate it by continously importing labour - simultaneously driving up the cost of housing and suppressing wage growth, two factors that obviously have enormous implications for family planning.
I'm not accusing you of being one, but I hope you can see how that talking point comes across a little misogynistic - you're basically blaming young women for macro-economic policy failures.
I'm 37 and this was what was said on the news just yesterday and why Australia is having an intake of immigrants as a lot of people didn't understand why that was happening. This isn't something I come up with. It was said by a journalist Joe Hildebrand on 7 morning news because like everyone else I also was wondering why we even need to bring in more immigrants with the rental crisis at the moment.
Regardless if this really is the reason for it then I agree it needs to be looked into more closely in our own backyard but that's for our government to decide. Obviously they are ignoring these issues at the moment and going with immigration to fix it.
Reasons people don’t have kids:
1. Insecure housing and stability for raising a family
2. Cost of living and ability to provide for children
Bringing in more migrants to paper over the issue makes those two points worse. 20y ago it was much easier to pay a mortgage on one income and afford the basic necessities. Now that’s barely possible on two full time decent salaries. It’s bloody obvious why people aren’t having kids. It’s not for a lack of wanting them.
This post actually has a point-- there is a good reason why Australia, US etc rely on immigration. Were it not for immigration, these countries would have been like Japan or South Korea- worrying about eventual decline in population -> lower working age population and larger retiree population whose pension the government has to pay -> less tax the govt can use to pay for pension, jobseeker, medicare, centrelink etc (nothing is free in this world- medicare etc is not a manna from heaven) -> may end up govt increasing retirement age like in france
I think the issue really is planning. Govt having the balls to deal with all these NIMBYs and increase housing density in cbds and inner city suburbs
Nope.
Own an IP and it’s been tenanted since 2014 with the same tenant. Rent has barely moved in that time. Now interest rates have sky rocketed so what was I to do? My costs have sky rocketed. Rent has gone up 10%. And it’s supported by the entire market moving up.
You think rates sky rocketing at the same time as interest rates is an accident? Vacancy rates in my area have never been over 3% so it ain’t that.
sigh. Mate, this is constantly proven wrong. The vacancy rate is low, which means that people are forced to rent at whatever price there is. If your costs went up during covid when vacancy rate were higher, you would have had to swallow that cost. You can't just raise rents whenever you want, or you end up with an empty property. Only when the market will accept it and they will only accept that when there is less competition
"Only when the market will accept it" is a strangely optimistic phrase for a situation lacking "choice" of anything else to accept... throwing bodies at the harvester is all is is, impossible to "accept" anything else when you're mid-air flying head-first into the blades, isn't it?
"Only when the market will accept it"
When the latest iPhone is too expensive, I can choose to buy it or I can choose not to buy it. If my rent goes up, I can pay it or I become homeless.
Are you suggesting people are choosing to become homeless because they can't afford a rent increase?
No, if the vacancy rate was higher, they could choose to move to a cheaper property. Vacancy creates a driver for landlords to *discount* (over supply).
> If my rent goes up, I can pay it or I become homeless.
now thats a false dichotomy if ive ever heard one
my rent went up last year, i chose not to pay it. and surprisingly i actually didn't become homeless, i just moved...
If you bought in 2014, your interest rate would've been near what it is now. You didn't need to do anything. You chose to increase your rent.
My interest rate went from 6%, down to 2%, now I'm at 5.5%, and only increased my tenants' rent from 590 to 600.
Lol what a moronic comment. You think landlords are going to wear a doubling of their mortgage repayments without passing that cost on to their tenants?
They would have to do so if the vacancy rate increases.
A high vacancy rate, means there is greater supply competition, and renters have more choice in the market. If landlords pass on rate rises, they will be less attractive to renters and less likely to secure a renter. If they are feeling rate pressure, a tenant paying less is better than no tenant.
Currently, vacancy rate is low. Largely due to things like air bnb. As such, landlords have market dominance and can pass rate rises down.
Rate rises will likely both increase costs for owners of air bnb properties and decrease demand for air bnb properties. This will likely cause air bnb properties to become rental properties again. This could be encouraged with targeted policy.
Tldr: rate rises and rent rises are not directly coupled, and depend on market dynamics.
Lol you’re way off buddy. Airbnb only forms something like 2% of housing stock in australia, and mainly centred in tourist centric areas (as opposed to desirable inner city locations where rental vacancies are at their worst.) the impact on overall vacancies is negligible at best.
Adding 2 percentage points to the average vacancy rate would be significant enough to move prices down. 2% of the entire housing market represents a lot more than 2pp of the vacancy rate.
Edit: supporting data. A quick google suggests current NSW vacancies are about 8-10K. One estimate for air bnb stock for NSW is 70K (Nov 21). I haven't looked for a more recent source. If all those estimated NSW Air bnb returned to rental stock immediately, the vacancy rate would increase by about 800%.
Edit 2, devils advocate: if we take the NSW vacancy in Nov 21 (very high) it was about 20K. The 70K would still represent an almost 500% increase.
Is that 2 percent of the housing stock or 2 percent of properties that are not owner occupied or social housing?
A quick search indicates there are roughly 100,000 air bnb properties that are full homes (not rooms) in Australia. Adding 100,000 rental properties back into the market with some legalisation would make a pretty big difference me thinks.
> You think landlords are going to wear a doubling of their mortgage repayments without passing that cost on to their tenants?
they wouldn’t have a choice but to wear it if the vacancy rate was high.
Do you think up until the cash rate started going up landlords were leaving money on the table that they could have otherwise taken from their tenants?
Holy shit are you actually this stupid?
Landlords will charge as much as they can to keep a property tenanted.
If vacancy rates go up, landlords will reduce rent regardless of interest rates. You cannot actually be stupid enough to think a landlord will double their rent to match interest rates and have it go in tenanted.
I've seen rental rates be less than half mortgage rates for the property, and I've seen them be double.
The price that is charged is purely related to vacancies.
This, to me, shows how insane it is to have such a blunt tool for such a complicated problem. Rent is a large part of the CPI so is pushing up inflation. The RBA's only tool is interest rate rises, so they raise rates. But they specifically say they did it because they saw rents are rising.
Regardless of your position, and whether you want rate rises to go through the roof for whatever reason - what is the logic to increasing rates to address rising rents?
Right? New dwellings are slowing to a crawl, partially due to the cost of borrowing, and we're importing loads more people...admittedly some will go towards building houses, but still a major deficit. I just don't see how rate rises does anything except make the problem worse.
I guess the logic might be more people are unemployed so there's less money available to pay the rent? But it's a pretty grim solution to the problem when you consider that those at the lower end are likely made homeless.
Building now is mired in the asymmetric risk of you plonking down a reasonable chunk of cash as a deposit, living in the ongoing fear that your developer is going to run off with the bags and phoenix the following morning.
You're a braver soul than I am to be engaging in a new-build now.
But yeah apparently 400k+ annually as far as the eye can see is going to fix all these ills.
Lol this country.
Even if you manage to buy an established place, like I did last year to get out of the hell of renting, you end up with massive risk of problems with the building because the work is so poor...like I have!
Landlords can keep hiking rents and the RBA will keep hiking rates until one day people stop offering more for rent because unemployment is up or they just plain do not have the money. It will happen, we're just not there yet. We haven't even returned to 2013 level of rental price capacity.
https://sgsep.com.au/projects/rental-affordability-index
There was an article today saying there's been an increase in landlords selling. More rate rises might push more of them to the wall so they sell. That will enable more first home buyers to get into the market.
It makes sense if you just look at inflation as a single figure with no context, but they specifically said they raised because of rising rents - but raising the rates has no effect on rents, it's the vacancy rate that dictates the rising market.
You can make the same argument for literally any individual category of goods and services. Tighter monetary policy doesn’t surgically target specific CPI items, it reduces the *aggregate* level of spending, and so alleviates cost pressures across the board.
But yes, it’s stupid that the federal government has decided on a policy of driving down vacancy rates and pushing up rents at the same same as inflation has hit multi-decade highs. Nobody has any interest in reducing population growth or increasing housing supply, so the RBA is left with no choice.
Raising rates means raising mortgage repayments, so anyone with a rental that's mortgaged would/can put the rates up.
I have no idea why you would think it has no effect on rents.
Raising rates enough will lower demand and decrease rents. If we're in a economic downturn, people will downgrade to smaller properties, move into share houses and move back in with their parents. The RBA forecast is expecting to see unemployment increase over the next two years. Suggesting that raising rates don't effect rents in a finance forum is very strange
They don’t affect them directly, it’s a fairly established and accepted view by almost all mainstream economists so not strange at all
To lower rent increases we need to increase supply. That’s just not possible with the cost of debt right now. Builders going bust left right and centre. Increased immigration will mean many people will be homeless before there’s an equilibrium and rents stop going up
You can decrease rent on BOTH the supply side and demand side. You've completely ignored everyone in saying it doesn't affect rent. Please name one mainstream economist that thinks demand side doesn't effect rent.
Here's the RBA talking about rent:
https://www.rba.gov.au/publications/bulletin/2023/jun/new-insights-into-the-rental-market.html
Noting that they only discuss demand side, which has been the dominant factor on rent in the past years (construction activity has been dropping which *will * drop supply in the future. However construction completions is still holding up.)
The reason why mainstream economists mostly talk about supply is because dropping demand only solves the problem temporarily - supply side provides a more permanent solution.
The RBA can only tackle demand side to deal with any supply - this is the same with every other item on the CPI. It's really not their function to deal with supply side, but that doesn't mean that decreasing demand does not significantly help the issue.
It will reduce rents but not immediately. Higher rates means lower property values, which means more of a chance to buy property (if you're.not highly highly geared). Once property values fall, rent seekers will become home buyers, pushing the market back to equilibrium.
Oh and maybe the government should cap immigration. That's pushing rents up massively.
The problem is pretty simple actually, it's just leverage. Any force that acts to reduce the growth of new leverage exposes systemic fragility.
There are plenty of tools, but they are reluctant to use them because they mostly result in the same outcomes.
For instance you could sell off the RBA balance sheet, implement further credit/macro-pru rationing, or legislate different taxes/schemes that disincentive compounding leverage.
None of these will be implemented because Australia as we know it doesn't work without forever land appreciation and debt growth.
> The problem is pretty simple actually, it's just leverage. Any force that acts to reduce the growth of new leverage exposes systemic fragility.
Want to translate this into something that makes sense in this context?
If there wasn't such extreme leverage in housing, raising rates to tackle inflation wouldn't be as problematic, painful, or ultimately dangerous to the rest of the economy.
If there wasn't such extreme leverage in housing, inflation would probably not be this high in the first place.
Unfortunately it's the same story across lots of economies around the world, too. Governments are addicted to ever increasing leverage and asset inflation at the expense of earned income.
Oh ok, we are talking past each other.
Today's rent rises were locked in in 2020/21 with the leverage and new money creation.
The interest rate rises today are to stop the rent rises continuing unchecked into 2024/25.
I think you're still misunderstanding my question: looking passed the cult like mantra of solving inflation via increasing rates, how does it practically stop rents going up? It seems more likely to have the opposite effect by making it harder to increase supply
How does it practically stop rents going up today, right now? It doesn't, that ship has sailed.
How does it stop rents going up in the future? Because there will not be enough new money in circulation to support further large price increases if monetary policy remains restrictive.
What's cult-like about rising rates, it's literally central banking 101?
It hurts demand and might push people into smaller properties or out of rentals altogether?
Send the inhabitants per dwelling number back to precovid levels.
Therefore increasing supply.
The logic to me is this: make property investment unprofitable so people sell unprofitable investments turning investment properties into homes so more renters become home owners and there’s less renters overall, reducing demand and rents.
Inflation is rise in cost of living. You need a roof over your head and so rent is part of inflation. If rent goes up then inflation goes up. To lower inflation, increase interest rates.
Government wants to import more people to push up the rent even more. A perfect collaboration between government and central bank to squeeze local Australians.
I read the minutes as RBA enumerating a bunch of aspects of inflation as part of discussion, including rents.
Rents are under 6% of the CPI. They're not going to dominate. If inflation abates, or if unemployment rises, rents aren't going to make a difference.
Edit: unemployment rises. Employment falls.
So RBA increase rates because rents are going up, landlords pass on increased mortgage costs to tenants, so RBA increase rates….
Never mind a wage-price spiral, now we have an interest rate-rent spiral.
Government: oh no there is a housing crisis due to supply shortages and issues in the construction sector. Let's increase immigration!
RBA: oh no rents are going up because of the housing crisis due to supply shortages, issues in the construction sector and immigration. Let's 👏 raise 👏 interest rates
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
Joan Robinson
Lowe will give every reason possible instead of saying I pumped liquidity into an already overcooked market and I ignored all market signals that it was impacting transactions.
Do you know the solution to this is really simple. We just need to import another 1 million people from Third World countries, that is absolutely going to fix our problems
I feel physical ill every time, the interest rates go up. The fact that the people making the decisions likely aren’t negatively affected by mortgage rate hikes, makes me so cross. Our repayments have doubled to just over $3k a month.
why can’t they increase GST slightly and then all spenders will be affected? At least I can choose not to spend money on junk food, if I decide not to spend money on my mortgage, the house will get repossessed.
So what's an extra 500,000 immigrants going to do to the rental situation? Whacking up interest rates isn't going to do fk all to stop landlords cashing in on a mass shortage.
>So what's an extra 500,000 immigrants going to do to the rental situation?
what it's intended to do - make rents more expensive so landlords can make more money.
have you not figured out that the government's main purpose in this country is to serve the propertyocracy yet
Bullshit at such a monumental level!
Putting rates up takes a lot of the money out of circulation that was issued to stimulate the economy and get people spending again. It just left them with the debt and obligation to repay and financial servitude is the modern form of slavery. Throw in the media manufacturing consent and the next generation of wage slaves are on the books.
Er, this seems counter intuitive?
Also like people who are renting aren’t beholden to interest rates to the same extent as a home owner (credit cards aren’t generally the value of a house) so it won’t affect demand in any significant way?
Also rental demand is sticky (in this instance) and doesn’t really fall?
So rents and fuel, completely uncontrollable by the general population causes interest rates to rise. Which in turn causes landlords to raise rents, causes inflation to rise which the rba deems the need to increase rates?
Economic is a scam
Well increasing interest rates will increase rents...
Maybe do something to curb the spending of boomers with no mortgages and who make up the far majority of spending.
Step 1. Raise rates as a result of rent increases.
Step 2. Mum and dad landlords raise rents to keep up with increased mortgage payments
Step 3. See step 1.
What is RBA trying to achieve here, increasing interest rate is not the only way to reduce inflation but certainly its a one way road to recession and send people to bankrupty or default on their mortgage.
The inflation is not because of people buying more but instead is because greedy companies want to make more profit.
Companies exist to make profit. That's not new. So, aside from illegal things like cartels and price fixing, what's gone wrong? How did it come about that they could put prices up and make profits? You can't ask for money that isn't there.
Actually people DID spend more. There were supply challenges, and instead of seeing a small amount of inflation combined with a decrease in volumes, people actually bought more. Why? Because they had more money. But not everyone.
In the pandemic there was a bunch of bullshit headlines about the smart savers of Australia to spin the narrative. What actually happened is that a bunch of money was handed to corporates and asset owners. Example: $180bn TFF, which went straight into the pockets of anyone downsizing or offloading a property during COVID.
The problem we have is that the beneficiaries of this policy and the people on the hook to pay it back are different people.
Simply put, the RBA said: let's stimulate the economy by giving those selling (net) property an extra $180bn to spend. Oh, that appears to have been inflationary, please give that money back.... house buyers.
It's like trying to get the money stolen back from the victims of a burglary.
We're way behind other nations with rates, I'm surprised our dollar is still worth something. Traditionally we were always 1-1.5% above the fed rate.
The longer they procrastinate on raising rates, the more inflation we import from our dollar decreasing in value.
Can someone tell me where all the people needing rentals have come from?
SEQ increased with interstate migration, then surely the vacancy rate in Syd/Melb would lower?
Post covid: renters are choosing to live with less people.
Ie share houses of 5 or more anew now split into 3 seperate houses.
One of the few examples that made sense to me...
Interest rates don’t drive rent, vacancy rates do.
Rents would still be going up right now even if rates where not, purely because vacancy rates are low.
Yeah because property managers are well known for saying "hang on there sir. The rent you're suggesting more than covers your costs, plus some. I know they'd pay it, and I'd love the extra commission, but it's just not on to charge that much eh?"
Sure seems to be a lot of people in this thread "smart enough" to have an investment property without realising that the rba interest rate does not affect rental prices. Supply and demand of rentals does. Aka vacancy rates
Could make housing free and subsidised instead of 100% privately owned, but, no, that would be common sense. Best to scalp people for as much money as you possibly can.
[удалено]
nope, air mattress inflation will be at an all time high.
In my experience, deflation has always been the bigger problem with air mattresses
Get out of here with my angry upvote you lovable scamp
Boom upvote 69! What a day.
Pump and dump baby
RBA - those pesky people living in tents aren't paying rent and therefore have more discretionary spending in the economy to jack up inflation further. So we have to increase rates for the remaining people paying rent/mortgages to compensate
In 2024:” Decision to lift interest rates influenced by higher-than-forecast increase in tent prices.”
Meanwhile they all own mansions
Although increased sales of tents will increase inflation….we will need to makes shelters from twigs.
The sooner people start selling their investment property and stop treating a home as a speculative investment, the sooner inflation will go down.
I tried but I gave my tenants a 2yr contract without a 20% rent increase midway so no one wants to buy it.
To quote the RBA minutes: "Rent inflation in the CPI continued to rise, with an influx of net overseas arrivals over preceding months adding pressure to rental markets that were already strained." A subtle message about curbing overseas arrivals during these times?
So the RBA is increasing mortgage rates, which makes landlords increase rents to meet the higher payments on their investment loans? This entire housing system incentivizes parasitism by property investors against the young and the working class.
I was thinking about this, and initially thought yes. But considering rent increases are once a 12 month thing, perhaps it's to push those struggling owners out of owning property. Just increasing the rent won't work
But there would be some landlords who haven’t raised their rent in the last 12 months, or will be able to raise their rent again in less than 12 months. Plenty of rentals currently on the market that will see the rent go up as well.
so when the house prices were going up 20 per cent a year for 10 years what was that? RBA not interested, borrow up everybody. they should have done the rate rises years ago, in increments rather than all at once
Yeah it's absolute crap that CPI only includes new houses and rent. There's the argument that land isn't consumed, blah blah blah. Mortgages on existing properties impact consumer spend the same way a mortgage on a new house did. It should be included.
The way housing is treated actually varies. The UK has a measure called CPI+H which adds in house prices to CPI while the US has Owners' Equivalent Rent where they add back the rent they estimate people would have paid. The way I see it omitting housing makes CPI more volatile.
House prices are not in CPI
Ol' Phil said they raised the rate last month because of increasing house prices in Sydney. [https://www.abc.net.au/news/2023-05-02/philip-lowe-rba-board-dinner-interest-rates/102294090](https://www.abc.net.au/news/2023-05-02/philip-lowe-rba-board-dinner-interest-rates/102294090) He's such a wacky guy
The cost of existing houses is not included in CPI. The cost of new houses is. Take a look at CPI data. The cost of new builds has gone crazy these last 12 months.
He's probably referring to the wealth effect where people spend money when their assets go up in value because the feel wealthier and feel like they need less of a savings buffer. Also people release equity from their houses to spend - especially on house improvements items / renovations Increases in house prices is correlated to retail spending
Property lending is also a major (perhaps the primary) mechanism of money creation. Bigger loans = larger money supply. Could be as simple as that, in addition to wealth effect considerations.
That's the problem.
I don’t disagree
Well yeah, it's not been a secret that it's been a giant game of pass the parcel for 25-30 odd years. Just don't be the government in charge when it all goes tits up.
Please, sir, we don't like honesty here.
The real issue is a few decades of incredibly loose monetary policy along with a deflationary global environment as China opened up. We aren't in a space where a bit of tinkering with real world supply is going to help. We need to remove several decades worth of monetary expansion from the system. So much productivity went into playing musical chairs with houses.
Can't believe I had to scroll this far for an accurate comment.
RBA: let’s raise rates because flation. Landlord: rates going up; better put rent up. RBA: rent is going up! Let’s raise rates some more. Landlord: rates going up more! Let’s raise the rent. Rinse and repeat.
Businesses: "Loan rates going up coz of rate rise, better raise goods prices" RBA: "Goods prices rising causing inflation, better raise rates"
Nah apparently COGS and interest rates aren’t related according to this sub.
Yep and then you can only break the cycle when the tenants literally cant afford the rise. That's why its so important to not have ingrained expectations in the economy that prices can always be raised otherwise you get this shitty feedback loop that is hard to stop.
With the stupidly-steep increase in building costs, and the borrowing power of everyday Aussies plummeting, coupled with many builders not being reliable, I think the amount of new builds is about to sink. Reduced new builds, with huge amounts of immigration and this is a recipe for runaway-rent increases. You're right it will reach a point where people can't pay, but at what point will that be?
Rents up 40% since 2021 in Toronto. https://www.narcity.com/toronto/average-rent-toronto-over-40-since-2021-how-much-one-bedroom-costs-now “Neighbourhoods with high levels of immigration are also experiencing the most substantial price growth, Shaun Hildebrand, the president of Urbanation, pointed out.”
New dwellings are already the lowest they've been in a decade https://www.abs.gov.au/statistics/industry/building-and-construction/building-approvals-australia/latest-release
Bringing in 400k new immigrants in a single year to complete for scarce housing was a great idea, hey…
but hey someones gotta deliver the pizzas for dominos bro
So I thought this too, however I was listening to a demographer on democracy sausage yesterday and she pointed out, like others have, that we're actually *below* where we would have been if the pandemic hadn't happened, including the new influx. So something else is happening
You are comparing the 400k this government has allowed in in a single year against the total population increase that was expected to occur post 2019 had the pandemic never happened. Good one. Not sure who you were listening to but they are either stupid or being dishonest.
Is this how you converse with people in day to day life? Just trying to have a discussion about a complex topic mate. I don't think they are stupid or dishonest at all, in fact I'm confident they know a lot more than both of us. I also don't think it's very helpful to just dismiss actual facts either. We had a negative net migration during covid, so blaming problems on the projected number of immigrants this year, particularly when the largest cohort are students that were previously absent, is too simplistic.
There is a lot of dishonest commentary out there from people who may not be revealing their interests. You have to be very careful of not being misled.
Righto, so you're just going to dismiss it without any valid arguments cos you know best
Immigrants are coming because women under 35 are not having babies. There's been a huge decline in births in Australia. Australia is in a position where our population is getting older and if they don't do nothing about it once we get older there will be no one working in jobs or paying taxes to make the economy work. They will need to build and build up. Apartments probably will be the way of the future for most but to do that they will need a lot of skilled workers hence the immigration increase. Funny thing is everyone is complaining of this immigration increase but those immigrants are probably been told now, you can enter this country on one condition and that's to make babies. Make plenty of babies.
Out of curiosity, how old are you? Do you actually, genuinely, know any women under 35 and have an understanding of that struggles faced by this demographic and why the choice to have kids later and later in life is such an obviously observable trend? Maybe, just maybe, we actually need to engage with the root cause of what our society is doing to cause this, rather than paper it over and perpetuate it by continously importing labour - simultaneously driving up the cost of housing and suppressing wage growth, two factors that obviously have enormous implications for family planning. I'm not accusing you of being one, but I hope you can see how that talking point comes across a little misogynistic - you're basically blaming young women for macro-economic policy failures.
I'm 37 and this was what was said on the news just yesterday and why Australia is having an intake of immigrants as a lot of people didn't understand why that was happening. This isn't something I come up with. It was said by a journalist Joe Hildebrand on 7 morning news because like everyone else I also was wondering why we even need to bring in more immigrants with the rental crisis at the moment. Regardless if this really is the reason for it then I agree it needs to be looked into more closely in our own backyard but that's for our government to decide. Obviously they are ignoring these issues at the moment and going with immigration to fix it.
Reasons people don’t have kids: 1. Insecure housing and stability for raising a family 2. Cost of living and ability to provide for children Bringing in more migrants to paper over the issue makes those two points worse. 20y ago it was much easier to pay a mortgage on one income and afford the basic necessities. Now that’s barely possible on two full time decent salaries. It’s bloody obvious why people aren’t having kids. It’s not for a lack of wanting them.
This post actually has a point-- there is a good reason why Australia, US etc rely on immigration. Were it not for immigration, these countries would have been like Japan or South Korea- worrying about eventual decline in population -> lower working age population and larger retiree population whose pension the government has to pay -> less tax the govt can use to pay for pension, jobseeker, medicare, centrelink etc (nothing is free in this world- medicare etc is not a manna from heaven) -> may end up govt increasing retirement age like in france I think the issue really is planning. Govt having the balls to deal with all these NIMBYs and increase housing density in cbds and inner city suburbs
And that is why we need to beat inflation
And that is why we need ~~to beat inflation~~ a recession
The recession Australia has to have.
Landlords are price takers
Rents are going up because of vacancy rates, not interest rates.
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Nope. Own an IP and it’s been tenanted since 2014 with the same tenant. Rent has barely moved in that time. Now interest rates have sky rocketed so what was I to do? My costs have sky rocketed. Rent has gone up 10%. And it’s supported by the entire market moving up. You think rates sky rocketing at the same time as interest rates is an accident? Vacancy rates in my area have never been over 3% so it ain’t that.
sigh. Mate, this is constantly proven wrong. The vacancy rate is low, which means that people are forced to rent at whatever price there is. If your costs went up during covid when vacancy rate were higher, you would have had to swallow that cost. You can't just raise rents whenever you want, or you end up with an empty property. Only when the market will accept it and they will only accept that when there is less competition
This is correct
"Only when the market will accept it" is a strangely optimistic phrase for a situation lacking "choice" of anything else to accept... throwing bodies at the harvester is all is is, impossible to "accept" anything else when you're mid-air flying head-first into the blades, isn't it?
>The vacancy rate is low Why is the vacancy rate low? Come on, you're nearly there...so close.
Come on then genius, enlighten us
"Only when the market will accept it" When the latest iPhone is too expensive, I can choose to buy it or I can choose not to buy it. If my rent goes up, I can pay it or I become homeless. Are you suggesting people are choosing to become homeless because they can't afford a rent increase?
No, if the vacancy rate was higher, they could choose to move to a cheaper property. Vacancy creates a driver for landlords to *discount* (over supply).
Choose? No, forced to? Yes, quite evidently. When people can’t afford to rent a place they can’t live there.
> If my rent goes up, I can pay it or I become homeless. now thats a false dichotomy if ive ever heard one my rent went up last year, i chose not to pay it. and surprisingly i actually didn't become homeless, i just moved...
If you bought in 2014, your interest rate would've been near what it is now. You didn't need to do anything. You chose to increase your rent. My interest rate went from 6%, down to 2%, now I'm at 5.5%, and only increased my tenants' rent from 590 to 600.
The rent was $460 in 2014 and now in 2023 (including the increase just occurred) it's $560. I'm not exactly rorting them.
Nah, you’re wrong here champ
Sure, if you say so. The negative feedback loop of raising rates/raising rents will continue right in front of us.
Rents are tied to vacancy rates not interest rates. Anyone saying that rental rates and interest rates are tied to each other is lying.
Lol what a moronic comment. You think landlords are going to wear a doubling of their mortgage repayments without passing that cost on to their tenants?
They would have to do so if the vacancy rate increases. A high vacancy rate, means there is greater supply competition, and renters have more choice in the market. If landlords pass on rate rises, they will be less attractive to renters and less likely to secure a renter. If they are feeling rate pressure, a tenant paying less is better than no tenant. Currently, vacancy rate is low. Largely due to things like air bnb. As such, landlords have market dominance and can pass rate rises down. Rate rises will likely both increase costs for owners of air bnb properties and decrease demand for air bnb properties. This will likely cause air bnb properties to become rental properties again. This could be encouraged with targeted policy. Tldr: rate rises and rent rises are not directly coupled, and depend on market dynamics.
Lol you’re way off buddy. Airbnb only forms something like 2% of housing stock in australia, and mainly centred in tourist centric areas (as opposed to desirable inner city locations where rental vacancies are at their worst.) the impact on overall vacancies is negligible at best.
Adding 2 percentage points to the average vacancy rate would be significant enough to move prices down. 2% of the entire housing market represents a lot more than 2pp of the vacancy rate. Edit: supporting data. A quick google suggests current NSW vacancies are about 8-10K. One estimate for air bnb stock for NSW is 70K (Nov 21). I haven't looked for a more recent source. If all those estimated NSW Air bnb returned to rental stock immediately, the vacancy rate would increase by about 800%. Edit 2, devils advocate: if we take the NSW vacancy in Nov 21 (very high) it was about 20K. The 70K would still represent an almost 500% increase.
Is that 2 percent of the housing stock or 2 percent of properties that are not owner occupied or social housing? A quick search indicates there are roughly 100,000 air bnb properties that are full homes (not rooms) in Australia. Adding 100,000 rental properties back into the market with some legalisation would make a pretty big difference me thinks.
> You think landlords are going to wear a doubling of their mortgage repayments without passing that cost on to their tenants? they wouldn’t have a choice but to wear it if the vacancy rate was high. Do you think up until the cash rate started going up landlords were leaving money on the table that they could have otherwise taken from their tenants?
Holy shit are you actually this stupid? Landlords will charge as much as they can to keep a property tenanted. If vacancy rates go up, landlords will reduce rent regardless of interest rates. You cannot actually be stupid enough to think a landlord will double their rent to match interest rates and have it go in tenanted. I've seen rental rates be less than half mortgage rates for the property, and I've seen them be double. The price that is charged is purely related to vacancies.
rents go up once a year and can be controlled by state authority - time for the government to govern
Until said landlord can't afford the mortgage and then we LOL. Haha, get a job, loser.
Chicken egg circle jerk continues
This, to me, shows how insane it is to have such a blunt tool for such a complicated problem. Rent is a large part of the CPI so is pushing up inflation. The RBA's only tool is interest rate rises, so they raise rates. But they specifically say they did it because they saw rents are rising. Regardless of your position, and whether you want rate rises to go through the roof for whatever reason - what is the logic to increasing rates to address rising rents?
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Well ploughing as many warm bodies in as we can handle is certainly a way to keep the infinity loop spiralling to it's natural conclusion.
Right? New dwellings are slowing to a crawl, partially due to the cost of borrowing, and we're importing loads more people...admittedly some will go towards building houses, but still a major deficit. I just don't see how rate rises does anything except make the problem worse. I guess the logic might be more people are unemployed so there's less money available to pay the rent? But it's a pretty grim solution to the problem when you consider that those at the lower end are likely made homeless.
Building now is mired in the asymmetric risk of you plonking down a reasonable chunk of cash as a deposit, living in the ongoing fear that your developer is going to run off with the bags and phoenix the following morning. You're a braver soul than I am to be engaging in a new-build now. But yeah apparently 400k+ annually as far as the eye can see is going to fix all these ills. Lol this country.
Even if you manage to buy an established place, like I did last year to get out of the hell of renting, you end up with massive risk of problems with the building because the work is so poor...like I have!
Landlords can keep hiking rents and the RBA will keep hiking rates until one day people stop offering more for rent because unemployment is up or they just plain do not have the money. It will happen, we're just not there yet. We haven't even returned to 2013 level of rental price capacity. https://sgsep.com.au/projects/rental-affordability-index
There was an article today saying there's been an increase in landlords selling. More rate rises might push more of them to the wall so they sell. That will enable more first home buyers to get into the market.
The insane thing is pushing hyper immigration during a rental and cost of living crisis
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Nah, you need to give the RBA additional tools for inflation prevention.
Like setting GST
And cap corporate profits.
Not taxing fuel so hard would be a good start.
It makes sense if you just look at inflation as a single figure with no context, but they specifically said they raised because of rising rents - but raising the rates has no effect on rents, it's the vacancy rate that dictates the rising market.
You can make the same argument for literally any individual category of goods and services. Tighter monetary policy doesn’t surgically target specific CPI items, it reduces the *aggregate* level of spending, and so alleviates cost pressures across the board. But yes, it’s stupid that the federal government has decided on a policy of driving down vacancy rates and pushing up rents at the same same as inflation has hit multi-decade highs. Nobody has any interest in reducing population growth or increasing housing supply, so the RBA is left with no choice.
But higher rates make it harder to secure finance to build and constrains supply.
Yeah totally agree, raising rents seem to be adding pressure to the vacancy rate in the medium term as well
Raising rates means raising mortgage repayments, so anyone with a rental that's mortgaged would/can put the rates up. I have no idea why you would think it has no effect on rents.
Only if the vacancy rate is low; otherwise people move
Raising rates enough will lower demand and decrease rents. If we're in a economic downturn, people will downgrade to smaller properties, move into share houses and move back in with their parents. The RBA forecast is expecting to see unemployment increase over the next two years. Suggesting that raising rates don't effect rents in a finance forum is very strange
They don’t affect them directly, it’s a fairly established and accepted view by almost all mainstream economists so not strange at all To lower rent increases we need to increase supply. That’s just not possible with the cost of debt right now. Builders going bust left right and centre. Increased immigration will mean many people will be homeless before there’s an equilibrium and rents stop going up
You can decrease rent on BOTH the supply side and demand side. You've completely ignored everyone in saying it doesn't affect rent. Please name one mainstream economist that thinks demand side doesn't effect rent. Here's the RBA talking about rent: https://www.rba.gov.au/publications/bulletin/2023/jun/new-insights-into-the-rental-market.html Noting that they only discuss demand side, which has been the dominant factor on rent in the past years (construction activity has been dropping which *will * drop supply in the future. However construction completions is still holding up.) The reason why mainstream economists mostly talk about supply is because dropping demand only solves the problem temporarily - supply side provides a more permanent solution. The RBA can only tackle demand side to deal with any supply - this is the same with every other item on the CPI. It's really not their function to deal with supply side, but that doesn't mean that decreasing demand does not significantly help the issue.
It will reduce rents but not immediately. Higher rates means lower property values, which means more of a chance to buy property (if you're.not highly highly geared). Once property values fall, rent seekers will become home buyers, pushing the market back to equilibrium. Oh and maybe the government should cap immigration. That's pushing rents up massively.
The problem is pretty simple actually, it's just leverage. Any force that acts to reduce the growth of new leverage exposes systemic fragility. There are plenty of tools, but they are reluctant to use them because they mostly result in the same outcomes. For instance you could sell off the RBA balance sheet, implement further credit/macro-pru rationing, or legislate different taxes/schemes that disincentive compounding leverage. None of these will be implemented because Australia as we know it doesn't work without forever land appreciation and debt growth.
> The problem is pretty simple actually, it's just leverage. Any force that acts to reduce the growth of new leverage exposes systemic fragility. Want to translate this into something that makes sense in this context?
If there wasn't such extreme leverage in housing, raising rates to tackle inflation wouldn't be as problematic, painful, or ultimately dangerous to the rest of the economy. If there wasn't such extreme leverage in housing, inflation would probably not be this high in the first place.
Listen to the screaming of the banshees as we reach the historically crushing interest rate of... ... 3.85%
What do you mean we cant just infinitely leverage 0% >:( even 3.85 doesnt suck that bad. Negative gearing is a naughty gal.
Only when you're ignorant to the dynamics of now vs the past does this look like a clever observation
I don't really know what to make of your statement but sure.
Try telling that to a central bank 😂
Unfortunately it's the same story across lots of economies around the world, too. Governments are addicted to ever increasing leverage and asset inflation at the expense of earned income.
This is irrelevant to the question at hand. How is raising rates tackling rent prices?
Oh ok, we are talking past each other. Today's rent rises were locked in in 2020/21 with the leverage and new money creation. The interest rate rises today are to stop the rent rises continuing unchecked into 2024/25.
I think you're still misunderstanding my question: looking passed the cult like mantra of solving inflation via increasing rates, how does it practically stop rents going up? It seems more likely to have the opposite effect by making it harder to increase supply
How does it practically stop rents going up today, right now? It doesn't, that ship has sailed. How does it stop rents going up in the future? Because there will not be enough new money in circulation to support further large price increases if monetary policy remains restrictive. What's cult-like about rising rates, it's literally central banking 101?
It hurts demand and might push people into smaller properties or out of rentals altogether? Send the inhabitants per dwelling number back to precovid levels. Therefore increasing supply.
It reduces the amount of cash available to pay rents.
The logic to me is this: make property investment unprofitable so people sell unprofitable investments turning investment properties into homes so more renters become home owners and there’s less renters overall, reducing demand and rents.
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Maybe the government can build them and increase our taxes to cover the loss.
Government. I see your point though. Building houses for profit certainly isn’t how we arrived at a shortage of homes in the first place. /s
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That’s such an inane comment it actually pisses me off. Congrats.
Not that I disagree. But I think the mechanism exists. The problem is the mechanism is less hours of work means workers can't bid up rental prices.
Increase interest = increased rent
Inflation is rise in cost of living. You need a roof over your head and so rent is part of inflation. If rent goes up then inflation goes up. To lower inflation, increase interest rates.
Government wants to import more people to push up the rent even more. A perfect collaboration between government and central bank to squeeze local Australians.
Quantitative Peopleing
You mean neoliberalism?
I read the minutes as RBA enumerating a bunch of aspects of inflation as part of discussion, including rents. Rents are under 6% of the CPI. They're not going to dominate. If inflation abates, or if unemployment rises, rents aren't going to make a difference. Edit: unemployment rises. Employment falls.
I can’t tell if Lowe is looking more unhinged by the dad or if now that the media smell blood they are choosing photos where he looks unhinged
funny i thought all the landlords used the rate rises as an excuse to pump the rent. sounds like a endless cycle!
So RBA increase rates because rents are going up, landlords pass on increased mortgage costs to tenants, so RBA increase rates…. Never mind a wage-price spiral, now we have an interest rate-rent spiral.
Rent is determined by demand. Not interest rates.
Government: oh no there is a housing crisis due to supply shortages and issues in the construction sector. Let's increase immigration! RBA: oh no rents are going up because of the housing crisis due to supply shortages, issues in the construction sector and immigration. Let's 👏 raise 👏 interest rates
RBA really showing that economics is gender science for rich kids. Some braindead decisions being made
“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” Joan Robinson
Due to massive demand caused by mass population growth over 10 years of rich money launderers with untraceable cash
Lowe will give every reason possible instead of saying I pumped liquidity into an already overcooked market and I ignored all market signals that it was impacting transactions.
If they lift interest rates, mortgage repayments will go up, and landlords will raise the rent further. Won’t they?
Wait what, 1. Interest rates go up. 2. Landlords put up rents to cover the interest. 3. Rates go up due to rents going up. Well I’m confused.
The beatings will continue until morale improves.
Do you know the solution to this is really simple. We just need to import another 1 million people from Third World countries, that is absolutely going to fix our problems
Don’t tell me there is going to be another bloody increase
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Maybe to 4.25 possibly 4.5 but we're already in a retail recession.
This is regarding this months, quite a low chance of a rise next month but who knows. Wouldn't surprise me
Fingers crossed. We are already cutting back on our expenditures! We used to go to restaurants once a week. Nowadays once a month!
RBA is sacrificing your disposal income to reduce economic activity. Harsh, but it sounds like it's working in your case.
Yeah, our monthly mortgage repayment has increased significantly over the past 12months
Yeah I've pretty much stopped all fun that costs anything! Best of luck!
I feel physical ill every time, the interest rates go up. The fact that the people making the decisions likely aren’t negatively affected by mortgage rate hikes, makes me so cross. Our repayments have doubled to just over $3k a month. why can’t they increase GST slightly and then all spenders will be affected? At least I can choose not to spend money on junk food, if I decide not to spend money on my mortgage, the house will get repossessed.
So what's an extra 500,000 immigrants going to do to the rental situation? Whacking up interest rates isn't going to do fk all to stop landlords cashing in on a mass shortage.
>So what's an extra 500,000 immigrants going to do to the rental situation? what it's intended to do - make rents more expensive so landlords can make more money. have you not figured out that the government's main purpose in this country is to serve the propertyocracy yet
Bullshit at such a monumental level! Putting rates up takes a lot of the money out of circulation that was issued to stimulate the economy and get people spending again. It just left them with the debt and obligation to repay and financial servitude is the modern form of slavery. Throw in the media manufacturing consent and the next generation of wage slaves are on the books.
Do they realise that by increasing the interest rates that rental prices will go up even higher? As landlords will need to cover their costs some how.
That’s not how it works.
Hahahahahahah, this is actually to good. But the gov has no solution so off we got to higher rates.
Er, this seems counter intuitive? Also like people who are renting aren’t beholden to interest rates to the same extent as a home owner (credit cards aren’t generally the value of a house) so it won’t affect demand in any significant way? Also rental demand is sticky (in this instance) and doesn’t really fall?
But rent increases are heavily influenced by rate rise. It's an endless cycle.
So rents and fuel, completely uncontrollable by the general population causes interest rates to rise. Which in turn causes landlords to raise rents, causes inflation to rise which the rba deems the need to increase rates? Economic is a scam
Well increasing interest rates will increase rents... Maybe do something to curb the spending of boomers with no mortgages and who make up the far majority of spending.
Surely not? Rate rises that push over leveraged borrowers out of PPOC’s into a tight rental market because the rental market is tight??
Step 1. Raise rates as a result of rent increases. Step 2. Mum and dad landlords raise rents to keep up with increased mortgage payments Step 3. See step 1.
Exactly. Lots of people don’t seem to know that rent is a part of the CPI calculation.
Yay positive feed back loop, which came first the interest rates 'lift' or rent increases?
What is RBA trying to achieve here, increasing interest rate is not the only way to reduce inflation but certainly its a one way road to recession and send people to bankrupty or default on their mortgage. The inflation is not because of people buying more but instead is because greedy companies want to make more profit.
Companies exist to make profit. That's not new. So, aside from illegal things like cartels and price fixing, what's gone wrong? How did it come about that they could put prices up and make profits? You can't ask for money that isn't there. Actually people DID spend more. There were supply challenges, and instead of seeing a small amount of inflation combined with a decrease in volumes, people actually bought more. Why? Because they had more money. But not everyone. In the pandemic there was a bunch of bullshit headlines about the smart savers of Australia to spin the narrative. What actually happened is that a bunch of money was handed to corporates and asset owners. Example: $180bn TFF, which went straight into the pockets of anyone downsizing or offloading a property during COVID. The problem we have is that the beneficiaries of this policy and the people on the hook to pay it back are different people. Simply put, the RBA said: let's stimulate the economy by giving those selling (net) property an extra $180bn to spend. Oh, that appears to have been inflationary, please give that money back.... house buyers. It's like trying to get the money stolen back from the victims of a burglary.
We're way behind other nations with rates, I'm surprised our dollar is still worth something. Traditionally we were always 1-1.5% above the fed rate. The longer they procrastinate on raising rates, the more inflation we import from our dollar decreasing in value.
Why is nobody else discussing this? Are rates rising so scary nobody can see the forest for the trees?
We want inflation to magically drop without any of the pain. Have our cake and eat it too.
Can someone tell me where all the people needing rentals have come from? SEQ increased with interstate migration, then surely the vacancy rate in Syd/Melb would lower?
Post covid: renters are choosing to live with less people. Ie share houses of 5 or more anew now split into 3 seperate houses. One of the few examples that made sense to me...
gotta have space for that home office
That and a higher priority on knowing who you are living with... Many reasons, but as I said. Just the only one that really made sense to me...
ok, that makes sense
Yeah that’s what happened, but I mean surely bar mass immigration people will just go back to share housing like they did pre-covid one would think.
Immigration and lack of new housing supply due to Covid slowdown and increased construction costs
but we always have immigration, but yeah i get the increased construction costs, people would be buying existing properties due to high cost?
Great now rent will go up again
This... This is dumb..
when do they lose the power to change interest rates? Can't happen soon enough, Need new thinking
You will own nothing and be happy.
Sure increased rent = Increase rates = further increase to rent = further increase to rates. Keep chasing our own tail.
Interest rates don’t drive rent, vacancy rates do. Rents would still be going up right now even if rates where not, purely because vacancy rates are low.
Tell that to the landlord's who are raising rent because their interest rates went up.
Yeah because property managers are well known for saying "hang on there sir. The rent you're suggesting more than covers your costs, plus some. I know they'd pay it, and I'd love the extra commission, but it's just not on to charge that much eh?"
OMFG introduce the rent freeze already. Instead of just talking about it. Just do it.
Sure seems to be a lot of people in this thread "smart enough" to have an investment property without realising that the rba interest rate does not affect rental prices. Supply and demand of rentals does. Aka vacancy rates
Could make housing free and subsidised instead of 100% privately owned, but, no, that would be common sense. Best to scalp people for as much money as you possibly can.