By Rich Harvey, CEO & Founder, propertybuyer.com.au
There’s a lot to love about Brisbane. It’s grown to become one of Australia’s most exciting cosmopolitan capitals. There might be some from interstate who continue to regard it as Australia’s “big country town” but I venture they haven’t visited anytime in the past decade.
The River City offers an abundance of fantastic lifestyle options. There’s world-class dining and entertaining, not just in the CBD and adjacent Fortitude Valley, but throughout the suburbs as well.
The climate is a joy too. A winter’s days in Brisbane is like a Melbourne spring morning. And for those wary of the more humid summer, there’s a short drive to some of Australia’s best beaches.
There’s plenty to love but, in some ways, Brisbane is also a victim of its own success. Demand for housing has translated into one of the greatest challenges the city and its nearby regions have had to face.
Brisbane is now officially the toughest rental market in Australia after logging the country’s highest annual rise in weekly prices, with regional Queensland not far behind.
There’s now a dire shortage of rentals, and it’s only set to get worse.
According to the latest PropTrack analysis, Brisbane’s median weekly rental prices had increased at the fastest year-on-year pace on record in the September quarter, having risen a record 14.1 per cent annually.
Regional Queensland figures were not far behind with a 12.9 per cent surge in median weekly advertised rents over the year to September.
Brisbane’s vacancy rate is tracking at an astonishingly low 0.7 per cent. That means there’s one available property for every 143 occupied rental homes.
The problem is due to the economic levers of demand versus supply.
First up, the supply of available rentals has been stymied by a range factors, most of which are political in nature.
An ongoing campaign across all levels of government – put particularly at the state level – has disincentivised investors. This includes higher land taxes and stamp duty, as well as greater CGT liabilities and reductions in claimable depreciation benefits for investors.
In addition, there has been an evolution of tenancy legislation that’s been heavily weighted in favour of renters. This has included factors such as tenants having more rights around keeping a pet at the property and making alterations to the home.
There’s also been relentless pressure from minor political parties such as The Greens who are pushing to implement rental freezes now and legislated maximum rent increases in the future.
Therefore, landlords are leaving in droves.
In fact, a study by the Property Investment Professionals of Australia based on their most recent Investor Sentiment Survey showed nearly 30 per cent of rental dwellings have been stripped from the Queensland market in two years as more than 160,000 investment properties were potentially sold to homebuyers. The survey also found that a staggering 45.1 per cent of investors had sold at least one property in the Sunshine State in the two years to August this year.
There will be multiple layers to the solving Brisbane’s rental market crisis, but they must come from a place of generating more supply.
I think the most effective thing politicians and others could do straight away is to stop vilifying property investors.
Describing investors as greedy, house-hording elites is plainly wrong. Most Aussies investors are on average wages and have only one or two rental investments. They’re hardly the ‘landed gentry’ that gets portrayed by special interests in the media.
Attacking investors is also clearly not winning over the electorate either. It’s amazing how vocal landlords become when they’re misrepresented – and they’ll make their disgust known at the ballot box. In fact, leaders of major political parties need to loudly denounce suggestions from minor politicians about rental freezes, capped increases and anti-landlord legislative changes if they want to keep their jobs.
Secondly, stop looking at ways to excessively tax investors. They’re clearly at their wits end and are exiting the market at an alarming rate.
Finally, start looking at ways to stimulate supply through incentivising investment and construction. Small moves can make a big difference. Guarantee negative gearing won’t be touched. Look to make depreciation allowances more enticing. Take another look at stamp duty, rates, CGT and other charges, and consider bringing those investor costs back in line with owner occupiers.
Do these things and our leaders might find Aussie investors will again embrace real estate as an asset, thus boosting the supply of shelter for people who need to rent.
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