- 09 Dec 2024
- By API Magazine
In 2025, the rental crisis will not get any better unless investors hear a more appropriate message from Government.
As a new year looms, investors are hearing mixed messages.
On the one hand, it is not an over-statement to say that the community is depending on them.
The rental situation is, as at the end of 2024, widely recognised as being at crisis point. This is the time of the year in which residential tenancies would typically turn over, as fixed terms come to an end, flatmates move on, and first home buyers who have entered the market in spring move into their new homes.
This year, it’s not the case. Those fortunate enough to have a home to rent are doing everything they can to stay. The gap between demand and supply of rentals is widening and for many, desperation has set in.
Investors are desperately needed to provide rental homes for tenants. But it’s not reasonable to ask investors to provide subsidised and social housing.
(Source: CoreLogic)
Like everyone else, investors’ circumstances are impacted by the uncertain economic picture. They too must navigate the persistent high cost of living, sustained higher interest rates and repayments, and stagnant capital growth.
Investors need to be satisfied that residential property is the best place to invest their money. After all, the provision of social housing is the job of the public sector, not the private.
But the messages investors are receiving from government contradict those the market is sending.
Government’s message to investors boils down to this: if you’re thinking about investing, don’t choose residential property, and if you’re already a property investor, then get out.
Reforms that make it more difficult for investors to recover possession of their property and remove their right to say no to a pet are driving investment from the sector.
Other investments, like shares, bonds, commercial property and the like, are comparatively more attractive. Investors in these assets are not burdened with broader societal responsibilities and are instead able to focus on the three things all investors require: for their investment to be secure, deliver a yield and achieve capital growth.
Government is asking property investors to take on more than they should have to. It’s no wonder so many are saying ‘no’.
Even those tenants who were supportive of new anti-landlord reforms cannot be considered winners if there are fewer homes to rent.
In 2025, the rental crisis will not get any better unless investors hear a more appropriate message from government. That message needs to be one of encouragement, and that encouragement must be in the form of making residential property the most attractive investment for people.
The opportunity is there. There are various factors in favour of investors.
Property prices are stable and while growth in values in Sydney and regional New South Wales is likely to resume next year, it is anticipated to be minor. Tight rental vacancy remains entrenched. New supply is an apparent focus, both at the state and federal level, but on the ground, not much is happening.
But reforms that make it harder to invest are countering these factors. Landlords are tired of being targeted. They have heard the message, loud and clear. It’s time for a new one.
