Investors have fled the market but high rents should bring them back
Myriad deterrents have been thrown at real estate investors while doing nothing to alleviate the rental crisis, but the market and high rents are pointing towards an opportune time for investors to return in big numbers.
While there is much talk about the housing crisis, and in particular the rental crisis, all of the conversations are in no way providing immediate relief.
State and federal governments have each come up with promises of substantial cash injections into the construction of affordable housing throughout Australia but none of that will see the light of day within the next few years, yet every day the rental crisis worsens.
Around the country there has been a sharp rise in the number of listings coming to the market for sale that are properties owned by investors.
Many have the normal reasons for selling, such as marriage or partnership breakups, deaths and retirement, but increasing numbers of investors are falling prey to higher interest rates and expressing concern about what they feel is uncertainty around their returns.
Talk of rental freezes and limitations to rent increases and increased regulations for landlords to improve premises is also discouraging investors.
Around the country on average, the volume of properties in the market for rent has dropped 15 per cent over the past two years.
During this declining in rental property volumes we see population growth at its highest level, primarily driven by immigration, and of course the first port for all migrants to Australia is a rental property.
Opportunity for property investors
There will be no quick fix to this situation and as such it is actually providing one of the best environments for investors who understand and can work with all the changing components of a real estate investment.
Great managing agents can help investors navigate through all of the government regulations and assure great outcomes. It is important for investors not to be fearful of rental ownership and in fact, by comparison to the majority of countries in the world, we have one of the most investor friendly regulation environments.
Slowly, governments are realising their policies have a huge effect on rental markets.
Hence the decision made by National Cabinet recently to rule out a rent freeze, while a minor consolation was to limit rent increases to once a year which is the most the majority of landlords do in any case.
The Real Estate Institute of Australia continues to work towards limiting negative policy and is working with governments to try and encourage positive policy that will provide incentives for landlords to buy.
One final tip, the rental crisis varies throughout the country, and it is always wise for investors to buy in the place of the greatest need.
This not only assures the greatest return but also plays a role in helping house fellow Australians.
When comparing all the various forms of investment, this should be a time that we see the greatest interest by investors in the property market.