Recently there have been media headlines along the lines of “Rental crisis shows no sign of softening”, as if there was an expectation that vacancies should be rising and rents easing.
Of course there are no signs of the rental shortage crisis softening.
It’s going to get considerably worse before it gets better.
There are few things in life, or in real estate for that matter, that are sure things – but this is an absolute certainty.
The rental shortage crisis WILL get worse, from the viewpoint of people looking for a place to rent.
Here’s why:-
- One, we have the lowest vacancies ever recorded in Australia, but no solutions have been presented by any state or federal government. The only suggestions coming from politicians are measures that would make the situation worse.
- Two, supply shortages are set to get worse because we are not building enough new dwellings and building approval figures continue to fall.
- Three, there is massive new demand coming into the market, with the Federal Government lifting the intake of overseas migrants – and foreign students flooding back into Australia, exacerbated by recent decisions by the Chinese government.
There have been millions of words written and spoken in media recently about the rental shortage and the impact it’s having on tenants – and people who would like to become tenants if only they could find somewhere to rent.
Almost all of that commentary has been worthless observation, speculation and chest-thumping.
Hardly anyone has put forward a viable solution.
This is remarkable because, once you understand how we got into this mess, the solution is readily apparent.
Politicians could fix this problem almost overnight, simply by encouraging Australians to buy investment properties and make them available for rent.
This is the thing that hasn’t been happening in recent years, because of adverse decisions by politicians and bureaucrats.
The people in politics making the most noise about this are the Greens – and their suggested measures would turn a crisis into a national disaster.
The Greens and others have characterised property investors as the problem.
But investors are NOT the problem.
They are the solution.
Over 90% of properties rented by tenants across Australia are provided by mum-and-dad investors – most of whom are ordinary households on average incomes who own just one property.
The problem is that there are too few of them right now, because government decisions have discouraged them – repeatedly in recent years.
We need to do the opposite. We need to encourage people to become investors.
If that happened, we could fix two serious problems. We could increase the supply of rental properties and thereby stop rents from rising, and we could help more Australians to provide for their retirement years, thereby taking pressure off the Federal Budget.
Clearly that’s not going to happen, because the current Federal Government is heading in the opposite direction, with plans to increase taxes on people who appear to fit their definition of “rich”.
So, let’s not kid ourselves. The rental shortage is a crisis and it’s going to get worse.
Terrible for tenants – but an opportunity for anyone brave enough to invest in real estate.
