How many new properties are needed to solve the rental crisis?
One of Australia’s largest independent property groups has delivered the volume of properties it believes will resolve the rental crisis that the nation is in the grips of.
Kevin Young, president of Property Club, has said that, over the next five years, Australia needs to create at least 1 million additional properties to help solve the rental crisis.
He said that the latest census showed that during the five years from 2016 to 2021, just 359,829 properties were added to the nation’s rental stock, which he says is well below the required number.
“This shortfall now has resulted in the average rental vacancy rate across all capital cities sitting at just 1 per cent at a time when Australia has a severe labour shortage.
“Australia has the second most severe labour and skills shortage in the world, according to the OECD, only behind Canada,” he added.
He believes that with both federal and state governments’ push to bring hundreds of thousands of new workers into the country, the crisis will only worsen, unless a target of creating at least 200,000 affordable rental properties per annum over the next five years is established.
“The latest building approvals figures highlight the urgency of this massive boost in rental properties with overall news dwelling approvals in Australia on the decline.
“To achieve this goal the government needs to undertake taxation reforms to make it more attractive for investors to buy established homes rather than buying new properties that generally charge tenants higher rents,” he said.
Key to this is for the new Labor government to restore tax depreciation benefits to second-hand properties that are purchased by investors, as this is the quickest way of increasing affordable rental stock, according to Mr Young.
“As a country, we can quickly provide more second-hand properties with a weekly rent of $400 or under if we make this tax change.
“Tax depreciation benefits for second-hand properties were removed by the previous Liberal federal government which dramatically reduced the supply of more affordable second-hand rental properties throughout Australia,” he said.
“The result of this crazy change was investors stopped buying lower priced established properties that offered competitive rents to renters and instead bought new properties that retained tax depreciation benefits.”
With most of these new rental properties being located in the inner-city, high-rent areas, Mr Young concluded that this has starved “a famine of houses in the rental market with more and more families now having to live in shared accommodation or caravan parks because they cannot find a family home to rent”.
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