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It doesn’t matter what state or territory you live in, or what council area you come under, I can guarantee the next election in your region will be fought on housing.
A lot of promises will be made – we’ve already seen plenty of those – and unfortunately most of them won’t work.
There’s been roundtables and summits, states have argued for rent freezes, introduced measures to make it harder for landlords to move tenants on, and implemented higher taxes for owners renting their properties for short-term letting. Yet still we don’t have enough housing.
The latest “solution” is to triple the fees that foreign investors have to pay to apply to buy a property in Australia and triple the vacancy tax they will be charged if the property is left empty for more than six months of the year.
At the same time, in a bid to drive up investment in new housing stock, fees have been cut to foreign investors who put their money into build-to-rent projects. They’ll still have to pay an application fee, but it won’t be tripled.
The Treasurer, Jim Chalmers, says the higher fees will encourage foreign buyers to invest in new housing developments that will create additional housing stock, jobs in the construction industry, and support economic growth.
These fees can equate to hundreds of thousands of dollars, but will it dramatically improve our housing supply issue? I don’t think so.
One of the easiest solutions to fixing the housing crisis is to spread the load.
That means encouraging mum and dad investors to participate in the investment market.
It’s not about giving investors a hand-out, but a good start would be to stop treating property like a cash cow, adding on additional fees, taxes and restrictions that actually discourage investment and reduce the rental pool.
There is a misconception that every property investor in Australia is wealthy or a high-income earner.
The reality is 2.23 million Australians own an investment property and two thirds earn $100,000 or less, with half aged 50 or younger. The most common occupations of property investors are nurses, accountants, teachers, electricians and administration workers.
A survey by the Property Investment Professionals of Australia (PIPA) found that last year 19.2 per cent of investors were considering selling in 2023, with 12.1 per cent having followed through with that intention.
Many blamed “restrictive, unfair and inefficient legislative reforms” for their decision to stop investing.
Housing falling behind population growth
The Federal Government may have announced it will reduce immigration to more sustainable levels, but it’s too late; we have 100,000 less houses today than we need.
Australia’s population will grow by 435,000 people per year for the next five years, meaning we need to build 220,000 homes a year just to keep up, never mind eat into the 100,000 shortfall. We have built 220,000 homes in a year just three times in the past 16 years and haven’t managed to do so since 2018. We are only building 175,000 homes a year today.
Australia’s projected population growth is among the highest among a range of advanced economies. (Source: NAB, Macrobond)
If something isn’t done on a broad scale to address the issue, we’ll see more people paying exorbitant rents, sleeping in cars and struggling to find somewhere to call home and that’s something no Australian wants to see.
We need 100,000 houses to fix the housing crisis – you wouldn’t need many of the 2.23 million mum-and-dad property investors to build one more to solve the problem.
Originally Published: James Fitzgerald | Australian Property Investor | 16 December 2023
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