‘Our shortages are now’: The problem with pipelines
Pinning hopes on build-to-rent (BTR) projects may shoot Australians in the foot, the Real Estate Institute of Australia (REIA) has warned.
REIA president Leanne Pilkington has urged the Australian government to rethink its focus on BTR housing, noting that current predictions overestimate current capacity to turn BTR plans into reality.
The REIA’s recent Build to Rent Report found that BTR currently accounts for just 3,800 completed units, while the 2023 budget factored in “up to 150,000 units of supply being unlocked by the BTR sector”, according to the REIA.
“Our market analysis shows very clearly that the current pipeline will not touch the sides of this ambitious supply statement, which is more than 10 per cent of the 1.2 million homes target,” said Pilkington.
Of the 44,139 BTR units currently proposed, Pilkington observed that “only 43 per cent have approval”.
“BTR will take time to come online and our shortages are now,” Pilkington said.
She urged the federal government to consider BTR housing as a supplement to traditional private residential investment.
“BTR developments are poised to increasingly supplement the private rental sector, offering a promising avenue for addressing housing supply challenges,” Pilkington said.
“While projections suggest an expansion of the BTR pipeline in the coming years, it’s evident that private residential investors will continue to dominate the rental market landscape for the foreseeable future.”
According to Pilkington, the need to offer ongoing support to private residential investors is particularly crucial given that the Australian rental market “is grappling with unprecedented tightness in supply”, especially in its east coast capital cities.
“Escalating demand, coupled with persistent supply constraints, has left many prospective renters struggling to secure quality accommodation in proximity to their workplaces, families and transportation hubs,” Pilkington said.
With Melbourne and Sydney seeing rental housing surges of 38 per cent and 37 per cent respectively since 2014, Pilkington stated there is a “pressing need for new rental supply to meet burgeoning demand”.
She said: “In light of diminishing public ownership of new dwelling stock over the past four decades, the burden of constructing housing units has largely shifted to the private rental market. This trend underscores the pivotal role played by private investors in catering to the housing needs of both owner-occupiers and renters alike.”
As long as construction supply constraints persist, Pilkington said “private investors will continue to wield significant influence in shaping Australia’s rental landscape”.
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