Bubbles in Chocolate bars – The Victorian Rental Market

I believe our current system of capitalism is very much like an Aero bar. Yes it looks like a chocolate bar, but in actual fact, beneath the thin veneer of sugar and fat it is nothing but little bubbles of air.

Here in Victoria, another bubble is bursting in air, a bubble which has undoubtedly been bursting in many places all over the world. This bubble is the roof over one’s head. Simple and practical accommodation that is clean, safe, heated, has a toilet and bath, a roof that doesn’t leak in the rain and you don’t have to give up over half of your wage towards renting the space. It is estimated that a huge percentage of the population, homeowners and renters alike are paying anywhere from 60% to 70% of their earnings on either rent or a mortgage. Though this is an excellent control mechanism to restrict a person’s freedom, at the same time it confuses me because it goes against our role as consumers in a material world. How can we afford to continue to purchase all those toys and things that we are told we will not be able to live our lives without them, if we do not have the money to afford them? But then we have such a device called credit, which creates debt, which we are simply trying to ignore. Yet it is just another bubble that is bursting at the seams all over the Western world. And will be a messy affair. Rubber boots will be needed.

The rental market in Victoria seems to have hit the threshold of what people can afford to pay. Much of the population here has always been government, whether bureaucrat or military and the retired, with everyone else servicing them. After years, and in many cases decades, the owners of rentals, especially apartment buildings have enjoyed their profit margins. In many cases basic maintenance was just that, basic. One tenant moves out and it’s fill the nail holes with toothpaste, wipe everything off and get the thirty year old carpet steam cleaned before a new tenant moves in. Each time this happens rarely is the rent kept where it is. Often it is bumped up twenty or so bucks. This could happen more than once in a single year. As well, the government allows an annual rent increase for conventional residential tenancies to cover such things as utilities, heating costs, insurance, taxes and general maintenance. This rent increase limit has been about 3%, though in 2012 it has been increased to 4.3% in response to “material inflationary factors”.

This is all fine and dandy in a capitalistic world, where the thinking that unlimited growth within a finite system will work, unfortunately there is such a thing as reality for us simple folk. Inflating rents between vacancies and raising rental rates by the allowable government increases have combined to far out distance the much slower rise in the average wages a person earns. It’s becoming difficult for many, whether employed or not, to pay $850 to $950 to rent a simple 700 sq. Ft one bedroom apartment. Every apartment building in Victoria has, at least, 17% of their units sitting empty. The professionals, especially unionized teachers, nurses and government workers have no problem with the rental increases, the elderly are on wait lists for subsidized housing and the English as a second language, college and UVic students are getting together in groups of three and four and renting a three bedroom condo. The rest of us work to pay the ever increasing bills and hopefully have enough left over to indulge in the freedoms we allow ourselves to enjoy.

At the same time many of the owners are finally getting it and spending money on updating their properties because really, most apartment buildings in Victoria are over 30 years old, many over 50 years old, so the maintenance makes sense to simply keep the building standing. Earthquake proofing, updating heating systems, replacing balconies and bringing everything, especially anything to do with fire and safety, up to code is costing I’m sure, but the owners are also realizing that the actual rental suite must be attractive and updated for anyone to consider to pay such rent at all. And of course to put value into their investment in case they ever need or want to sell the property. This is where I think a “disconnect” seems to be happening.

The properties, and rental units themselves, are being made to look pretty, not for the betterment of anything other than to substantiate the high rental rate and to keep the money coming in. Much like home owners raising their houses and getting suites built underneath and either selling them as “condos” for a price that pays off their mortgage and building costs or  instead updating with all the bells and whistles to lease out to a young professional for twenty five hundred a month. Less and less people can afford an apartment in the nicer, more well taken care of buildings, while the lower end apartments nobody wants to live in.

The disconnect is, with the financial world corrupt and collapsing, we remain addicted to our “free” spending lifestyles. While at the same time a huge demographic group of society is at risk of eviction or having their power cut off if they lost a weeks wages let alone if they lost their job or had a family emergency rear it’s ugly head or an unexpected repair bill suddenly appeared. Many individuals and families are barely managing on their take home pay. Worrying not only on paying the rent or mortgage or putting food on the table, but being a loyal and obedient consumer as well.

What is needed is decent affordable housing. There are deals being done to provide such things but more often than not too many still believe in the fallacies, “If you build it they will come” and if you are going to build to either rent or sell, make it so you can make as much profit as you can out of the transaction, best case scenario being making more profit than you possibly need. For in today’s world profit margin is everything, on anything.

In the bedroom community of Oak Bay, in Victoria, with its large and stately, often gated homes and large Victorian houses; city council is still not allowing secondary suites in homes because of, wait for it, parking.

Meanwhile, where is everyone going to live when they simple cannot afford to rent, let alone buy anything? Most importantly, what happens when the very last Aero bar is eaten or the thin veneer of sugar and fat melts in the heat of the sun, and all those bubbles go bursting in air?

There will be seemingly insurmountable emergencies in our time. Our economy is based on false realities in a system that is not and probably will never work for the majority of the population. It is designed to concentrate wealth to the very few. They will not be affected when the bubbles, which prop up their design, continue to burst. Some of the bubbles are expanded but holding, some are literally like volcanoes, ready to blow, while others are being very slow in their eventual release.

We must be more humble and calm when each bubble bursts. Actually ponder why and what happened, and how can we remedy the situation, examine the causes and truly reflect on new ideas. We cannot overwhelm ourselves by thinking we are going to change things. We cannot worry about what is going on four thousand miles away. Just take one day at a time one little bit at a time with the people that surround you. Adapt and persevere. Or continue to become brainwashed into believing materialism and the almighty dollar is something that really means something and there soon will be more than one small bit part in the third or fourth version of the movie Invasion of the Body Snatchers available or just continue standing in place with that pharmaceutical glaze over your eyes, chewing your own cud and moaning baa.

 

 

 

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