Rent markets: growing, and no sign of stop

Discussion in 'Buying & Selling Real Estate' started by WaveWage, Oct 31, 2015.

  1. WaveWage

    WaveWage Well-Known Member

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    Some thought that in 2014, already, the rental prices was already too high and couldn't sustain for long. The thing is, in 2015, it still sustains and show basically no sign of stopping growth. Some may feel it creepy.


    After all, the annual rent growth was, at September, +5.2%. And if all the the last 8 months shown a yearly-growth of +5%, so it still sustains. And one year ago, the rent growth was +4.1%.


    To continue on that line, 95.3% of apartments nationally are occupied. That's pretty high, meaning only 4.7% are free at this time. The most profitable appears to not be the suburb, but the urban constructions.
     
  2. Corzhens

    Corzhens Senior Investor

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    The high rental is actually a sign of good economy. The real estate industry is perking and so are other industries related to it like the construction business. As per the law of supply and demand, high rental will cease when there are no more tenants willing to pay that much. It happened here a long time ago when some apartments remained empty for a time. The landlord had to slash down the rent so they can at least earn instead of having their apartments in a stagnant condition.
     
  3. WaveWage

    WaveWage Well-Known Member

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    For now it is not stopping and that's why Federal Reserve work is going to be hard, talking about the December meeting. I always said U.S. housing industry is still up and here while other industries in the United States may suffer from China slowdown. And that rental affair confirms what I think about it, because building is still here. But it feels like the people today prefer to let other people build to rent after, instead of buying it themselves. Okay, the building industry isn't complaining as well so they still do it, just less than expected.


    So it's a good sign for U.S. economy while I'm not sure about why it still sustains today.
     
  4. Corzhens

    Corzhens Senior Investor

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    On the contrary, that good sign of high rental and good economy is the crux of the traffic problem in Metro Manila. The regular heavy traffic is a bane to the businesses and it seems that the government couldn't do any major remedy. They increased the number of posted traffic officers so the traffic remains clogged most of the time. The influx of people from the suburbs is the one causing the heavy traffic. In other words, Metro Manila is congested that's why the rental is getting higher and higher due to the law of supply and demand. The more demand for apartments, the higher the rental.
     
  5. WaveWage

    WaveWage Well-Known Member

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    But I don't see clearly the link between the traffic problems and the apartments' demand. Are you telling that because the traffic is stuck, they try to be nearer of their work in order to spend less time in transport, driving higher the rental rates?
    If that's the case, I don't know if it's really a good sign. First thing is that traffic jams isn't helping business, delivery times and so on so it slow down the local economy. But, higher rental rates are in general a good sign for the economy, because the apartments owners are winning more money, meaning expansion in that industry. But I wouldn't go as far as telling that traffic jams are a good thing.
     
  6. Rainman

    Rainman Senior Investor

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    Apparently the reason why rents are soaring and it's not just in the U.S [it's happening all over the world] is this: there's a shortage of rentals. After the crash in 2008 investors lost interest in real estate and construction of rentals slowed. When that changes rent prices will drop.
     
  7. WaveWage

    WaveWage Well-Known Member

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    You're pretty right, but I would say another thing: there's a shortage of home capacity, compared with demand. Because if rentals are soaring, I think many people are, as well, looking for building and buying houses but because loans was more complicated to get after the economical crisis, then, they gone to rentals. We shouldn't forget that in U.S. we had a major mortgage problems and some people were not really able to reimburse everything they should. It participated to the U.S. crisis, because U.S. crisis is double-faced compared to the whole economical crisis that happened in 2008. There was housing problems and economical problems.
     
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  8. Corzhens

    Corzhens Senior Investor

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    You are right on the relation of traffic to high rental rates. Condominiums in the business district are getting expensive every month. I have a colleague who bought a big condo unit in a building near our office so he just walks to work. That saved him about 2 hours of travel but it did not save him money because the condo costs 3 times the cost of his house in the suburbs and he has to pay 12,000 pesos in condo dues. So he is like paying a monthly rental of $300. And that's all because of the heavy traffic.
     
  9. WaveWage

    WaveWage Well-Known Member

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    Did he taken time to know if it was less costly or if he spent more by this option? I mean, it depends of the gasoline price and what way of transportation was used. But certainly, staying stuck in the traffic isn't free, especially in cars and taxis, about the public transport it's way less costly, as can be the bicycle. Bicycle could have been an option, as well, to avoid being stuck while still keeping the old house, in fact.


    After, I think that even if these heavy traffic jams helps to drive them to cities, it also makes business deliveries hard and block suddenly the city's expansion.
     

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