Re: Recovery, just not the normal sort

In alt.sysadmin.recovery on Mon, 12 Mar 2007 23:08:56 GMT
Jasper Janssen <jasper@xxxxxxxxxxxx> wrote:

Yeah, but high house prices mean (eventually) high rents as well, since
houses that go into the rental market typically do so for the mortgage on
it plus a little profit for the owner. Or to put another way, a house is
typically worth no more to a landlord than an amount x where the mortgage
on x equals the rent he can get for it. If the price goes above that, he
doesn't buy it, it goes to an owner-occupier, the rental pool shrinks,
which gives upward pressure on rents.


Depending on supply of both houses and renters.

The papers here are trying to talk rents up, but a bit of digging
shows that the rents are only rising in some areas.

The Herald is particularly funny when talking about real estate
because the reporters never go west of Leichhardt. So their
"battlers" are people who whinge about a $15/week rate rise in their
$350/week terrace in Glebe and their 'first home buyers' are those
worried if they can afford a $750k place in Paddington.

Their latest "rents going up" story spent a lot of space on inner city
rents, and right down the bottom noted that prices were steady
elsewhere.

THe problem with the housing bubble is that rents would have to just
about double to pay mortgages and unless there are many many more
renters than rentable space in your area your ability to cover your
mortgage is likely to be nil. If you do raise the rents then you are
hoping you will find renters willing to pay rather than go elsewhere.

In oz most rentals were investment meaning they wrote the difference
between rent and mortgage off on tax and hoped for capital gains.
Most are now finding that a loss is a loss even if you call it
"negative gearing" and that selling at a loss is also a loss. The
buyers of the investment units are covering a lower mortgage but are
probably finding the same problem.

Zebee

.

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