Rental Crisis

[Daffyduck]

How bad is the rental crisis at the moment? I'm hearing absolute horror stories about lots of families being homeless and it taking months to find accommodation.

We're hoping to be over in Adelaide around September and now I'm getting worried we won't find anywhere to live.

[Toots]

18 minutes ago, Daffyduck said:

How bad is the rental crisis at the moment? I'm hearing absolute horror stories about lots of families being homeless and it taking months to find accommodation.

We're hoping to be over in Adelaide around September and now I'm getting worried we won't find anywhere to live.

@Lavers is a fairly recent migrant to Adelaide.  Hopefully he can give you an idea of the current rental situation in Adelaide. 

[Lavers]

2 hours ago, Daffyduck said:

How bad is the rental crisis at the moment? I'm hearing absolute horror stories about lots of families being homeless and it taking months to find accommodation.

We're hoping to be over in Adelaide around September and now I'm getting worried we won't find anywhere to live.

Hiya

There are alot less properties up for rent due to people deciding to sell up as prices have gone through the roof.

Some of our friends got kicked out of there rental but have managed to find another one.

The rentals in the zones for the best public schools will be the hardest to get.

If you haven't got kids or are going private then this won't be an issue.

I'm sure you'll find something but worse case it may not be quite what you want.

 

[Daffyduck]

46 minutes ago, Lavers said:

Hiya

There are alot less properties up for rent due to people deciding to sell up as prices have gone through the roof.

Some of our friends got kicked out of there rental but have managed to find another one.

The rentals in the zones for the best public schools will be the hardest to get.

If you haven't got kids or are going private then this won't be an issue.

I'm sure you'll find something but worse case it may not be quite what you want.

 

Thanks very much, that's put me at ease a bit! 

 

We're not too fussed where we end up with the rental. Plan is to rent for a year to find out where we want to buy.

[Phil & Vikki]

With the way that mortgages are going up, would not be surprised if things on the whole get worse before they get better. Sydney seems to be having issues at the moment, but not sure if that is all across the country, but would think it is. Hopefully mortgages do not go up much more as if they do owners will be forced to sell up as they cannot afford the repayments. This will in turn lower the amount of rental property available.

[Ausvisitor]

Mortgages are certainly going up more, every single financial analyst is saying 3.35% as a minimum and many are suggesting nearer 4%

(The % above are the bank base rates, each bank will add a 2%+ premium to that as otherwise they make no money lending to you)

To put that into context for someone not here in Australia at the moment

Im may when the bank rate was 0.1% a 500k mortgage on average mortgage rates (about 1.5% above bank rate) would have had a monthly repayment of $1720

Today at bank rate of 2.35% the same mortgage repayment is $2350

At 3.35% (which people are saying will be around Feb 2023) it becomes $2650

So a $1000 more a month to service to the same house loan as you had 9 months earlier (assuming not fixed)

 

So if there are 2 of you working on the average Aussie salary of $89k you would both need a pay rise to $97k each just to keep up with the mortgage increase.

That's nearly a 10% increase in salary just to stand still - the property market is going to suffer!

[Whey aye]

On 29/09/2022 at 06:11, Ausvisitor said:

Mortgages are certainly going up more, every single financial analyst is saying 3.35% as a minimum and many are suggesting nearer 4%

(The % above are the bank base rates, each bank will add a 2%+ premium to that as otherwise they make no money lending to you)

To put that into context for someone not here in Australia at the moment

Im may when the bank rate was 0.1% a 500k mortgage on average mortgage rates (about 1.5% above bank rate) would have had a monthly repayment of $1720

Today at bank rate of 2.35% the same mortgage repayment is $2350

At 3.35% (which people are saying will be around Feb 2023) it becomes $2650

So a $1000 more a month to service to the same house loan as you had 9 months earlier (assuming not fixed)

 

So if there are 2 of you working on the average Aussie salary of $89k you would both need a pay rise to $97k each just to keep up with the mortgage increase.

That's nearly a 10% increase in salary just to stand still - the property market is going to suffer!

To be pedantic that isn't really how a bank works. Note 4 in an annual report will tell you how loans are funded,deposits and other public borrowings from stable and well diversified sources.Whether they are current( payable within 12 months) ,or non current ,longer term.

Note 4(1) funded from within Australia,term deposits etc $744 billion.$$132 billion of that they are not paying interest on.C'mon people lift your game,at least get some interest out of them.

Overseas borrowings $$113 billion,for years it was a 60% local and 40% o/seas Now that seems to be 70 to 75% local and the rest from o/seas.I gave up reading them heavily years ago,I can analyse them to within an inch of their life and it doesn't change the share price or the dividends at all so why bother.

Note 3(1) tells you who they lent it to $556 billion in Australia for mortgages,and $65 billion o/seas ( NZ)

Basically interest paid to the bank,minus interest paid out is profit ( net interest margin or NIM).

You can plough through in more detail but I wouldn't bother,fractional reserve banking can be complicated or simple.

CET 1 ratio ( common equity tier 1) the examples are for CBA. CET 1 is regulated,minimum of 10% ,that may have changed. CBA are running on 12% last time I paid attention .Every $100 lent out keep $12 for day to day running expenses and a rainy day.A run on the bank and they have a standby among the big 4 for 2 to $3 billion each to keep confidence in the system.Lent at interbank overnight rates.Common name would be LIBOR,it isn't really worth going into.

Lend the money out at 4% ,pay the depositors 2% , then 2% gross profit. 1.1% of that pays wages etc and 0.9 % is taxable profit.

 

[Whey aye]

To keep it really simple and rounded call it $620 billion lent out on mortgages at a 1% net profit margin, $6.2 Billion.That's where people kid themselves they make huge profits.