Today I want to discuss a crucial and timely topic.
You see, I am worried about the current housing crisis which is impacting both the rental market and houses for sale.
As property prices continue to skyrocket and rental rates soar, the wealth gap between property owners and non-owners is widening at an alarming pace.
So today I explore the causes of this growing divide and discuss the implications for our society, as well as potential solutions to address this pressing issue.
There is a housing crisis in Australia with an undersupply of both properties for rental and for sale.
The surge in immigration and the return of international students has seen demand for housing boom.
Australia is simply not building enough new homes to accommodate the extra people coming into Australia.
The implications of an undersupplied housing market are far-reaching.
Not only do rising rental and purchase prices place a significant burden on those looking for a home, but the lack of affordable housing options can also lead to increased homelessness, social inequity, and financial stress for many Australian households.
It should come as no surprise that the ramifications extend beyond the personal sphere, affecting the broader economy.
High housing costs can deter potential skilled migrants from moving to Australia and discourage Australians from spending in other sectors of the economy, further stifling growth.
The problem is that most sellers are buyers, they need somewhere else to live.
They will likely upgrade or downgrade so bringing more properties onto the market will not really solve the undersupply problem.
And of course, some investors are selling their properties, but in general, these get sold to owner-occupiers, further exacerbating the rental crisis.
It's not so easy.
It takes quite some time to build new houses (up to a year) and much, much longer to build the many apartment towers we require to provide more medium-density living in the middle-ring suburbs of our capital cities where much of the demand is.
And even if developers did want to commence new projects, currently financially the sums just don't add up.
There’s nothing new about high levels of immigration to Australia.
High numbers of immigrants:
- Mitigate the challenges of an aging population
- Address skills shortages
- Bring diverse perspectives, ideas, and expertise that can drive innovation and productivity
- Create businesses and generate employment opportunities, which stimulate the economy
- Increase demand for goods and services
- Bring cultural diversity that enriches society and fosters a more inclusive and tolerant environment
- This enhances the nation’s image and attracts international investment, boosting the economy
I really can't see the government decreasing migration levels anytime soon.
In my mind, a multi-pronged approach is necessary to tackle the complex housing crisis in Australia.
This approach should include:
- Streamlined planning and approval processes: Reducing the red tape and bureaucratic hurdles involved in obtaining approval for new developments could help expedite the construction of new dwellings.
- Reduce government taxes for construction: One forgotten cost in the push for more affordable housing is the level of tax on new construction.
- Incentives for private developers: Offering incentives to private developers to build more affordable housing options can stimulate supply.
- Encourage property investors: Encouraging property investors to provide accommodation would be one of the quickest and simplest solutions to the rental crisis.
- Greater investment in public housing: In my mind, the government has a crucial role to play in increasing the supply of affordable housing options.
- Encouraging regional development: By promoting the growth of regional centres, the government can help to ease the pressure on housing demand in major cities.
- Addressing labour and material shortages: The government can take steps to address the labour and material shortages that are hampering the construction industry.
- Balanced migration policies: While cutting immigration could help to reduce demand for housing, it is essential to strike the right balance.
The housing crisis in Australia is not going away any time soon.
There is no quick fix.
The law of supply and demand means that:
- The rental crisis will remain for some time yet and rents will keep increasing.
- The shortage of good housing will underpin property values for years to come.
- Our property markets will remain fragmented - those with higher incomes will be able to afford to own property in our capital city middle ring suburbs where prices will keep increasing, while the less affluent will be pushed further and further out to the fringes of our cities.
- First-home buyers will have more difficulty getting into the market
- Unfortunately, the wealth gap between those who own property and those who don’t will only keep widening.
Links and Resources
Metropole’s Strategic Property Plan – to help both beginning and experienced investors
Get a bundle of free reports and eBooks – www.PodcastBonus.com.au
Some of our favourite quotes from the show:
“In other words, our housing crisis is likely to persist for many years as strong population growth just isn’t going to be matched by the increased supply of dwellings.” – Michael Yardney
“With lower fertility rates and increased life expectancy, our demographic structure is shifting towards a higher proportion of elderly Australians.” – Michael Yardney
“Those who own property are going to be better off, and those who own the right properties are going to do even better.” – Michael Yardney
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