NSW housing crisis measures only punishing investors
The chief of New South Wales' peak real estate body argues that measures implemented by the NSW Government are doing little to increase housing supply but much to dissuade property investors.
As expected, NSW Labor’s first Budget since winning government was littered with plenty of references to the state’s housing crisis.
Regrettably, these references don’t translate to real action. The $224 million for the Essential Housing Package and a few thousand public housing dwellings to be delivered over the long-term won’t make a dent in the context of the severity of the housing shortage, including the dearth of affordable and social housing.
If not government, who is expected to solve the crisis? In the case of the provision of more public housing, government expects the development community to come to the rescue.
In the case of rental supply, it’s apparently up to investors to do government’s job.
Yet through the rental reforms it seems intent on pursuing, the state government is seeking to punish those it is counting on to alleviate the critical rental undersupply.
In doing so, it is choosing to wilfully ignore a growing weight of data.
High rents still not luring investors
As of July, CoreLogic figures show rents rose for the 35th consecutive month. Cue the predictable response that ‘greedy’ landlords must be to blame. But if this is the case, why then are investors abandoning residential property as an investment?
Obviously, something is amiss. This is where the chronology of rental reforms, both proposed and implemented, is so telling.
The 2021 Census recorded 30.6 per cent of the country’s homes as investment properties that were rented. But this is changing at a time when demand for homes to rent is spiralling.
Recent PropTrack data shows that, as at June 2023, around 30 per cent of all property sales in Greater Sydney were by investors. It was about 20 per cent in June 2020, during the first wave of Covid, and has generally trended up since.
And while many investors are selling, fewer are buying. According to ABS figures for August 2023, in seasonally adjusted terms, the value of new loan commitments for investor housing was 3.0 per cent lower compared to a year ago.
The natural consequence is fewer homes to rent and less choice for tenants. Figures from the UDIA and CoreLogic show that in mid-2020, the volume of rental listings nationally was over 350,000. Three years later, this volume has dipped below 300,000.
Over the same period, rents have been rising and demand is up, which you would think would encourage investors to hold on to their properties.
Instead, hindsight clearly shows the impacts of anti-landlord legislation have had a much bigger influence. That and interest rates, of course. Mercifully, the Reserve Bank gave mortgage holders another reprieve at the October meeting, despite the persistence of high inflation.
Why are investors shedding properties?
The COVID rental moratorium was a watershed moment. It triggered a series of tenant-centric announcements, which has vastly shrunk the rental pool.
Forcing landlords to accept pets; telling investors when they can and can’t have access to their property; compromising the capacity for rental bonds to protect investors’ assets; actively seeking to increase the volume of disputes for NCAT to deal with – the hits on investors have been continuous.
Directly correlating with these so-called reforms has been the exodus of investors from the market. And by extension, the worsening of the rental crisis for tenants.
It’s in the numbers, plain as day. Government can’t keep ignoring the data.
Rents rising, vacancy rates falling
Domain figures show the median asking rent for an apartment in Sydney has now reached $680, an increase of over 23 per cent in the past year.
It’s a similar story across the country as the sheer scale of the crisis becomes ever more apparent.
PropTrack data reports advertised rents increased 14.6 per cent over the past year, up from 14 per cent in the previous quarter.
Median advertised house rents are $550 a week nationally and units rents are $520 a week and rental vacancy continues to fall.
According to CoreLogic, in the four weeks to 1 October, the number of rental listings nationally fell to its lowest level since November 2012, with just over 90,000 properties listed to rent – a shortfall of about 47,500 homes.
There’s no quick fix but there’s no excuse not to get to work on the supply solution.
Please note that any political views expressed in this article are the contributing author's own and do not necessarily reflect those of API Magazine.