Property Investors for cooling rental market

Wanted: Property Investors for cooling rental market

I’m all for reporting on the latest trends in the Property Investment market and news affecting real estate investors.

Well, the biggest property investing story around right now is the issue of rising rents.

Rental prices spiralling up

Rental PropertiesA close friend is looking for an apartment right now, and commented to me that when he went to inspect a potential property, there were so many people on the street waiting to view the apartment that he thought there must have been a car crash!

Of course, this is driving up rentals as prospective tenants compete with each other as they bid for the right to rent a property.

In extreme, prospective tenants are offering $50 per week above advertised rent in order to secure leases! That’s just one example to this problem.

The hardest people hit are those who can barely afford rent as it is. Such as small businesses, start-ups and middle class hardworking families.

AS usual our government wants to help and provide us with some potential solutions. Politicians have offered two different options to the spiralling rent market.

The Opposition has said the government’s rental assistance scheme should be reformed to help ease the costs of rent.

On the other hand, The Federal Government has said the best option is to get rid of the $7,000 First Home Owners Grant completely in order to take the heat out of the housing market.

Which one is the best solution?

The opposition’s plan is flawed in that subsidising rents stands to increase the cost of rents – just as the First Home Owners Grant increased property prices – because people have greater spending power which they can use to put towards renting.

On the other hand, the Federal Government’s plan to get rid of the First Home Owners Grant is flawed because it doesn’t address the issues behind the rental demand. People using the First Home Owners Grant are home-buyers, not renters – and I don’t see how the FHOG is related to rental properties.

My sentiment is the solution could be one of two things.

Either the government offers incentives to attract more Property Investors back into the market – who will create more housing for the market through developments and offering properties for rent.

Or the property market economic cycle needs to be left unabated – and in time the market will find its own balance. Either one should help the situation, but until then, we’re stuck.