[OPE-L] How the rising interest rates could push up tenant rents...

From: Jurriaan Bendien (adsl675281@TISCALI.NL)
Date: Mon Sep 18 2006 - 17:55:19 EDT

Prediction of squeeze ahead on rental front

Tuesday September 19, 2006
By Anne Gibson, New Zealand Herald

Rising interest rates could force landlords to sell their properties,
creating a shortage of accommodation which would push up rents, according to
Tony Brasier, president of the Real Estate Institute of Australia. Brasier,
visiting Auckland yesterday for the New Zealand Real Estate Institute's
national conference, said conditions between the two countries were similar.
He was concerned about New Zealand's rental housing supply, saying investors
had few incentives to buy more properties due to further threats of interest
rate rises. In Australia, rising interest rates have forced debt-burdened
landlords to sell. Those rental properties were being removed from the
sector because in many cases, owner-occupiers were buying, creating a
shortage of rental homes. This has sparked rising demand which in turn has
triggered rent rises. Rents rose 24 per cent in Perth in the year to June,
23.5 per cent in Hobart and 18 per cent in Brisbane.

Reserve Bank Governor Alan Bollard last week signalled the possibility of
further interest rate rises and Brasier said this could tip the balance of
the rental market in New Zealand. Even if Bollard does not raise rates
again, the interest rates paid by some investors might rise as their
fixed-rate mortgages expire and they have to take on new mortgages at higher
rates. "If New Zealand's rental sector follows Australia's pattern, then
interest-rate increases mean investors don't have confidence to buy places,
which leads to a shortage of rental accommodation," Brasier said.

Complete article:
In 1872, F. Engels wrote rather radically:

"As long as the capitalist mode of production continues to exist, it is
folly to hope for an isolated solution of the housing question or of any
other social question affecting the fate of the workers. The solution lies
in the abolition of the capitalist mode of production and the appropriation
of all the means of life and labor by the working class itself." - F.
Engels, "The Housing Question"

Well, meantime you still have to live somewhere...


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