Asking rents are rising almost everywhere because there are not enough vacant rental properties to meet the demand.
Property investors create rental supply, but rather than being rewarded, they are discouraged by falling prices, low rental yields and ever-increasing restrictions on landlord rights.
Why on earth would anyone invest in residential property when the rental income doesn’t cover holding costs, and falling prices may lead to an eventual capital loss?
Even though that’s already a lose-lose scenario for many investors, the rights of landlords are constantly being eroded while those of tenants are strengthened.
The result is that fewer properties are available for rent because investors switch to other assets such as commercial, shares or even crypto.
While it may be politically expedient to blame investors for rapidly rising rents, the facts are that we are facing a national shortage of rental accommodation. We are not building enough new housing because of rising costs and material shortages, yet housing demand is escalating at the same time.
Based on current population growth figures, we need to accommodate around 150,000 new rental households this year, but right now there are less than 50,000 advertised rental vacancies in the whole of Australia.
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What are the only possible solutions to this issue?
Our governments could engage in huge public housing construction programs, but all we have so far is the National Housing Accord Scheme announced in the last federal budget.
The accord “will aim to include the target of building one million new homes by the end of 2029”, but doesn’t actually undertake to build any of them.
Given such double-speak, it is unlikely that government action will resolve the rental crisis, leaving the provision of more rental accommodation in the hands of private investors.
This means that governments need to encourage more private investment in housing, not less.
Landlord bashing may be politically popular, but it does nothing to resolve the growing shortage of rental properties and in the meantime, asking rents will keep soaring.