Interest rates up. House prices down (-20% in my city). Number of available rentals up (almost doubled in some markets). Rental prices down (looks like around -10%).
It looks like underutilised housing is being flushed out due to high servicing costs. The jig is up.
Interesting, where are those rentals coming from? Is it just an overall drop in demand for any housing?
Intuitively to me, if you make one thing harder to do (buy a house), unless people disappear or you suddenly build more rentals, they go in the other direction and create more strain there (renting).
Where are these people living if they can't buy but are renting less? Are both demands are dropping?
I think that it's a case of underutilised properties being flushed out.
No one really considers it, but in a booming market you might be more likely to have a higher percentage of underutilised properties. When the market turns, those properties that were making money just by virtue of existing now lose money. A second home or a holiday home is one example. A house being slowly renovated is another. Plain old land-banked properties, etc.
Put it this way. As the property market has boomed, the proportion of properties owned by investors has increased. Because only investors will underutilise a property (homeowners occupy it by definition), the proportion of underutilised properties increased. When the market turns, capital gains look less certain, and holding costs increase, investors try to get out. The underutilised properties get flushed out.
In major cities, renters often have roommates. When they exit the rental market to become homeowners, they often pick up more debt and higher monthly payments but stop having roommates.
Interest rates up. House prices down (-20% in my city). Number of available rentals up (almost doubled in some markets). Rental prices down (looks like around -10%).
It looks like underutilised housing is being flushed out due to high servicing costs. The jig is up.