Can someone explain the narrative around rent rises? it seems like bullshit
I've gotten rent rises every year for the last 3 years, approx $100 each, due to low supply pumping the rental market. None of that has changed, and so I was already anticipating another rise this year.
Since the budget I've seen a lot of media hysteria about rent rises but noone is explaining it in any depth how or why this will happen, the below are two scenarios that seem to come up:
Scenario 1: Negative gearing is already causing rents to go up, because LLs costs have gone up.
Why? Negative gearing is grandfathered and will continue beyond 2027, nobody who was relying on the previous system is worse off than they were two weeks ago. If your landlord is claiming the budget is why the rent is going up, it doesn't really line up.
Scenario 2: I saw some property people on youtube try and run out the scenario in more depth but it feels like it stops short:
- investors will retreat from the market and either stop supplying rentals or put their rentals up for sale;
- some people will be able to afford the properties but not everyone will;
- rental demand will not go down enough, supply will be constrained, rents will rise;
But then what? nobody explains this part. In this scenario we have properties on the market that are sitting empty waiting for sale, but no one can afford them. It seems the seller has two choices, either lower the price or rent it out while waiting for prices to stabilise. Letting an otherwise productive asset deteriorate while you pay maintenance costs doesn't seem like a good business decision.
It does seem that overall there's a lot of mainstream media hysteria and fear mongering.