Benn Dorrington
Updated 25 Aug 2023, 3:45pm
First published 25 Aug 2023, 1:46pm
As tenants in NSW face some of the toughest rental conditions in living memory, a new report has called for measures to incentivise investment and other solutions to address the state’s rental woes.
Launched by REA Group, publisher of realestate.com.au, the Measures to ease the rental market crisis report aims to unite the property industry behind five priority solutions.
To address the rental crisis, it recommended ongoing encouraged investment to keep property investors in the market, prioritising improved housing use and availability, and better government planning processes to promote fast and effective development.
PropTrack Senior Economist and report author Paul Ryan said targeted and considered policy reform had the potential to unlock housing supply in NSW and throughout the country.
Mr Ryan said competition for rental properties remained strong with substantially more potential renters competing for each rental listing than before the pandemic in NSW.
The number of actively searching renters and applications per rental listing remained high in the state, according to PropTrack.
In Sydney, rental vacancy rates were 1.65% – less than half the level seen before the pandemic.
These extreme market conditions continued to put pressure on advertised rents, which had increased 14.5% over the past year in Sydney.
“Rent increases, on top of general price inflation, is putting significant pressure on rental households with current conditions set to exacerbate financial stress,” Mr Ryan said.
“Compounding the issue, construction rates have slowed across the country with 72,000 fewer dwellings built since the onset of the pandemic compared to what would have been implied from pre-pandemic construction rates.”
At the same time, development conditions remained constrained by higher financing, materials and labour costs.
Public housing had not increased since the pandemic despite contributing strongly to the construction of dwellings in the past.
Sydney rental vacancy rates were 1.65% – less than half the level seen before the pandemic. Picture: Jeremy Piper
Additionally, planned development in Sydney was concentrated in a small number of regions to the west and south-west of the city, far from existing residents and services.
While there is no quick fix to the rental crisis in NSW, there are a range of policy reforms that would help bolster the state’s ailing rental market.
For investors, greater consumer protections for newly built dwellings were encouraged.
The report also flagged the importance of existing investor incentives to keep investors in the market and urged policymakers against increased rent regulation such as rent freezes.
“The good news is, we are starting to see investors return, which is an important support for housing supply and shows long-term confidence in the market,” Mr Ryan said.
“Alongside these reforms, we can improve renter tenure security and the suitability of homes with a focus on energy efficiency and higher minimum standards.”
To help improve the use of existing properties and land, higher taxes on vacant homes and shifting away from stamp duty to land taxes were recommended.
The report suggested developing coordinated planning processes between local and state governments to promote fast and effective development, as well as increased support for social and affordable housing.
Ways to support renters included promoting long-term tenancies, greater rent-to-own options and improved strata governance.
Tenants would also benefit from improved property management services and higher minimum energy efficiency standards for new dwellings.
The report gained insights from an industry forum convened by REA Group, featuring representatives from Tenants’ Union of NSW, Real Estate Institute of NSW, NSW Government, LJ Hooker, Ray White, Stockland, Salta Properties and Urban Development Institute of Australia NSW.
REA Group Chief Customer Officer Kul Singh, who worked on the project with Mr Ryan, said the report and industry forum was in response to calls to unite the sector to help inform policy and affect meaningful change.
“We wanted to bring together diverse perspectives to look at the near-term and address what we can do now to ensure better housing outcomes for all Australians,” Mr Singh said.
“We need to find more efficient and effective ways to increase supply, encourage investment, and attract and retain property managers in order to safeguard the rental experience.
“It’s pleasing to see a number of these areas on the national agenda of our regulators and policy makers with the recent National Cabinet announcement to boost housing supply a welcomed step forward.”
The National Cabinet supercharged its home building ambitions with an upgraded target to build 1.2 million new homes over five years and a plan to strengthen renters’ rights earlier this month.
Featured
Renting
Disclaimer: The information published in this section is of a general nature only and does not consider your personal objectives, financial situation or particular needs. Where indicated, third parties have written and supplied the content and we are not responsible for it. We make no warranty as to the accuracy, completeness or reliability of the information, nor do we accept any liability or responsibility arising in any way from omissions or errors contained in the content. We do not recommend sponsored lenders or loan products and we cannot introduce you to sponsored lenders. We strongly recommend that you obtain independent advice before you act on the content.
Personalised advertising: We show you more relevant advertising based on your activity. Prefer us not to? Opt Out of personalisation
realestate.com.au is owned and operated by ASX-listed REA Group Ltd (REA:ASX) © REA Group Ltd.
Recent Comments