Let’s not sugar-coat things. Australia and many other countries at the moment are in a housing crisis and it’s about to get a whole lot worse. There simply isn’t enough housing to accommodate people and we’re seeing more and more people homeless, living in sheds, cars, refuges ( if they can get in ) or having to move into cramped accommodation with friends or family. I have firsthand knowledge of this working in the industry but also as being a board member of the non-for-profit Albany Community Foundation. We’re getting more and more requests for assistance each week in our community. So much so, key people in the community are meeting regularly to try and find quicker, tangible solutions ( not wait till 2024 to build houses ).
People have asked me how we got in this position. Well for a start, home ownership has been declining since the year 2000 and that’s been roughly 5% across the market in that time. So, like everything it’s all about simple supply and demand. If there is less of a product available with a strong demand, then that pushes prices higher ( which is where the current market is at and heading higher ). We just haven’t built enough housing and governments have sold off assets without replacing them. So, you see we have less supply available. We’ve also been faced with people from overseas returning home and moving back into property after covid.
In my opinion it’s only going to get worse and higher. Why do I think it’s going to go higher? Firstly, you have a population increasing and about to tick over 26 million and the federal government is lifting immigration numbers to assist with the shortage of workers. State governments are meddling in changes to the tenancies acts ( just look at Victoria and the results of that. People I speak with in the industry tell me residential landlords are selling up and moving into the commercial space ). Also, in a REIWA survey early this year indicated that 61.3% of the 7000 landlords surveyed would sell in the next 2 years if the changes are bought in. Then, throw in local government rates increases, insurance increases, interest rates rises to name a few and it doesn’t paint a pretty picture of why you would want to be a landlord. So, my question is, where is everyone going to live being that the system is already overloaded? And how much more pressure can the social housing sector handle with waiting lists years and hundreds in the que ( estimated to be 33,500 in WA and over 600 in The Great Southern).
Government relies on the private rental market to provide rental properties, however the whole dialog around landlord’s vs tenants has created an unwelcome bias. Let’s remember here that 80% of investors are just your mum and dads who only own 1 investment property. So, this dialog needs to change. Without investors buying property, the potential tenant doesn’t even have a property they can apply for.
So, here’s an idea/solution that won’t be to everyone’s liking but something for further debate. Why isn’t there further incentives for investors to buy property? If mum and dad investors make up 80% of the investment purchasing market, then what about offering them no stamp duty required to be paid in the next 12 months if they buy 1 investment property that is fully leased out. Yes, it will mean government bottom line will take a short-term hit, however I bet it will be overall a better outcome than the cost of providing social housing or the cost of all supporting people with mental health effects from the stress of not having a house or the burden on service providers like Anglicare, our health system and many more agencies. Wouldn’t hurt treasury to cost it up at the least. And if investors buy properties, then at least there is more stock which is what is lacking!
And with more supply it should take up some of the slack in the market, shouldn’t it? What other incentives that would be required, I’m not sure just now and people will argue they already get massive benefits through negative gearing, depreciation and the like, but surely having something is better than nothing being we have a national crisis.
While yes, the divide in society between the people that can afford to buy property against those that never will, will get greater, isn’t it better to at least try to have more property available so that people looking to rent have an option other than a social housing waiting list or living on the street or in a car. Because if we don’t do something now it’s all going to be grim. Better to have an opportunity than nothing at all.
By Jeremy Stewart – Director
