The State Government in Queensland has been devoting itself recently to demonstrating why Australia has a rental shortage crisis.
Vacancy rates are the lowest ever recorded and rents are rising in most markets across the nation – because the people who supply rental properties have been consistently and systematically discouraged by the actions of politicians.
The leadership of the Queensland Government provide headline examples of the problems.
For the past six years or so, there has been a series of decisions by state and federal governments, as well as regulatory bodies like APRA, which have made property ownership increasingly unattractive.
Each decision which has been onerous to property investors, such as the federal decision to reduce depreciation claims and state policies that have favoured tenants to the detriment of the property owners, has caused more and more Australians to opt out of property ownership.
Slowly but steadily, year by year, investor owners have sold and the number of properties available for rental had reduced.
During the property boom of 2020 and 2021, more investors sold properties than bought properties, which meant the supply of rental properties got smaller.
- Two years ago the national vacancy rate was 2.0%.
- One year ago it was 1.4%.
- Now it is 1.0%.
Keep in mind that anything under 3% is a shortage – 1% is a crisis.
And it’s going to get worse before it gets better, because no one is presenting any solutions while demand for homes keeps rising.
Among the politicians working hard to make sure the problem gets much worse is the Queensland premier Anna Palaszczuk and her cohorts in the State Government.
Brisbane and Queensland already have one of the most serious rental shortages in the nation.
Brisbane’s vacancy rate is even lower than the national average, at just 0.8%.
And throughout Regional Queensland, most cities and towns have vacancy rates under 1%.
What is needed is a series of measures to encourage people to invest in residential properties and make them available for rental for the long queues of desperate wannabe tenants.
But Anna Palaszcsuk and her state treasurer Cameron Dick have been doing the opposite. Spectacularly.
Last year, Dick caused many investors to sell their Queensland properties by proposing massive increases in land taxes.
His proposed measures were untenable, unworkable and probably illegal – and ultimately the Queensland Government was forced to scrap the measure.
But in the meantime, more investors sold and got the hell out of Queensland.
More will follow that trend in 2023 because now Anna Palaszcsuk is proposing to “solve” the rental crisis by imposing rental controls.
It probably won’t happen because the chorus of outcry from economists, academics, real estate professionals, commentators and other politicians has been quite deafening.
And because it’s a really bad idea – and even our dumbest politicians will realise it eventually.
Indeed, this is a ludicrous proposition that would be counter-productive by making the situation much, much worse.
That a State Premier would float such an idea as a serious proposal shows how desperately little these politicians understand the problem, how it was caused and how it might be fixed.
Up to this point, the only political operatives silly enough to propose these kinds of non-solutions are The Greens, who simply can’t be taken seriously on anything to do with the economy or the real estate market.
Let me remind you about the situation in Ireland. In that otherwise wonderful country, the government implemented the kinds of property policies being suggested by The Greens and by the State Government in Queensland.
They scrapped tax breaks for investors, they increased taxes imposed on investors and they imposed rental caps.
The result: nothing at all available for rental in Ireland – a rental catastrophe far worse than the one we have in Australia.
They’re not allowed to increase the rent in Ireland – the problem is, tenants can’t find anywhere to rent at any price.
And Australia will face the same situation, much worse than the current already-dire situation, if they follow the path proposed by the Queensland Government.