Aussie Rents to rise?

According to this morning's Sydney Morning Herald, rents are set to rise 20% in the coming year. The reason? New laws that make superannuation investments more attractive which will channel money from potential retirees.

I'm sad to report that this occurrence is not as likely as you might think. The reason why people invest money is to get returns - including investing in property. If rents are going to rise then that will essentially make the investment more lucrative. In other words, the market will balance everything out.

Of course in recent years the housing market has been in a slump. Since the economy is driven in part these days by the housing market, and slump in the housing market leads to a slump in the economy as well. This means, of course, that people have less money to spend on rent which means that potential renters would not be able to afford such huge increases in rent.

And who is asking the government to change tax laws so that property gets more investment again? The Real Estate Institute of NSW. Now there's an organisation that won't stand for any talk of taking investment out of housing.

1 comment:

Theteak said...

Journos just will not leave this 'story' alone. They've tried making this into an issue at least three or four times in the past 12 months. Something tells me many journos own investment units in the inner city...