Unwanted records broken as worsening rental crisis demands new approach
Australian renters are paying more than ever to put a roof over their heads and key workers are being forced out of employment hubs, necessitating a new approach from governments and greater incentives for property investors.
Sadly our rental crisis continues to worsen.
Rental values are constantly pushing upwards to ever higher record levels, with the national rental index up a further 0.6 per cent in March.
No one on either side of politics is truly tackling the issues and most definitely there is no program in place that truly accelerates tackling this problem. All visions are long-term but not supported by key actions that will deliver outcomes.
We also have governments that simply don’t understand the markets.
They’ve brought in legislation that failed to encourage greater investment and has actually had a reverse effect. Appealing to voters is not the way to solve the housing crisis, it is facing up to the challenges and putting in policies that address those challenges.
We need a massive injection of investment into the rental market.
It is important to continue to encourage private investors to enter the market, by winning the hearts and minds and appealing to the logic of so many individual Australians who have the capacity to invest in real estate.
Property continues to be the best investment of all. Those who have owned investment properties through the 2020s have been astounded by the handsome returns they have made when combining rental return and capital growth.
Build-to-rent more important than ever
What we are seeing now is a greater discussion around a critical concept that has been operating through so much of Europe, parts of Asia and very much so in the United States, and that is build-to-rent (BTR).
The reason BTR is appealing is that it requires one investor, or perhaps an investor institution or indeed government, who will build specially designed large scale developments for rentals.
Nearly all of our development over the last 100 years have been build-to-sell (BTS) but with rapid population growth and with record immigration the most needed component of the housing market is rental properties - and we need them fast.
Among that need for rental properties is one vital component and that is BTR for key workers.
Business can only continue to grow it they can attract the skilled labour needed, but this is being hindered in so many parts of Australia by the lack of affordable rental accommodation to meet the needs of these skilled employees.
Typically they are on a salary of $100,000+ and are looking for rental accommodation from $800pw to $1,500pw. Not being able to source rental accommodation means they won’t take up the jobs and therefore choke our economy and its ability to expand even further.
The BTR concept is designed to inject volume into the marketplace. To make a BTR project work it generally requires a complex housing a minimum of 300 lots and must be close to public transport, major infrastructure such as schools, hospitals, shopping and of course close to major employment hubs.
Increasingly, major institutions are understanding how important rental accommodation is and so are starting to play their part in investing in BTR, but it will never be enough on its own.
It is, however, increasingly important that private investors also come to market and buy investment properties in the key areas they are needed.
The latest stats on property financing does show investor loans are on the increase but with a need for more rental properties today, it is private investors that are most needed.
The BTR sector still has to go through the longer process of acquiring sites, going through council approvals and then several years of construction.
Investors can play their part in helping overcome the rental crisis while benefiting financially in doing so.
