What will happen to property market if rents go down and if they cannot find tenants?
Currently we can see flood of rental listings in this slump period of the property cycle in some countries. In the last two months alone rental listing have increased by more than 50%. Some properties are sitting vacant for more than six weeks in some countries.
Some are finding difficult to find tenants now. In addition, some are like to live as a sharing groups now rather than living separately. Really, market is oversupplied now.
With rents, falling there is no value to be found in residential property because yields are too low to attract any investors now.
As a result of this property investors, associations and real estate agents are advising their clients to drop their rents if they want to fill their properties quickly.
What will happen to property market if this scenario gets worse? Thanks
I think this scenario will make more pressure to the depressed, falling property markets worldwide. .
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Best Answer
677 points
Dragonsbane answered 2 months ago …
I think the obvious answer to this question is that prices will go down.
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3127 points
EthanR answered 2 months ago …
MNSL, what area is this happening in? I am not seeing anything like that happening in my area. In fact, any decent home where I am rents fairly quickly, and at a good price. Perhaps it has a lot to do with the number of people moving into your area or out of it, vs the number of available units. When overbuilding occurs, this can happen easily.
Dragonsbane is correct, prices will go down where you are if that is what is occuring.
408 points
SallyG answered 2 months ago …
I would think that in the U.S.A. reduced availability/higher cost of mortgages would increase the tenant pool. However, I note in your profile that you are located in New Zealand, and I have no idea of the situation there or in other countries.
Here in the U.S.A., property values have declined from record highs, after nearly a half-century of consistent growth, which led people to assume perpetual increase in real estate. This assumption, IMHO, is part of what got us into this overextended credit situation, at least from the home-equity-loan part of the equation.
Before/during the Great Depression, according to my parents (who are in their late 70s), it was assumed that homes would decrease in value as they aged, but people also acknowledged that "you have to [pay somehow] to live somewhere" and home ownership was more a lifestyle choice/dream--controlling your own place of residence, being free of landlord and, in time, bank--than an investment decision. Long-term home ownership has always meant the possibility of seeing an end to mortgages (the equivalent of rent) and being responsible "only" for maintenance and property taxes, and not worrying about having a place to live. "Mortgage-burning parties" were great cause for celebration; now it seems that ending one mortgage seems only to signal either moving to a bigger house and taking on a new mortgage, or taking out a new home-equity loan. Things have certainly changed a lot!
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