The rental crisis, housing affordability and supply will be among the hot topics in the real estate sector leading up to the Federal Election on May 21.
And while some experts are tipping we will see the traditional slowing in listing volumes and buyer activity, others expect little noticeable impact.
Property Investment Professionals of Australia (PIPA)
Today, PIPA called on the party that wins the Federal Election to immediately make the nation’s critical undersupply of rental properties a key policy.
PIPA Chair Nicola McDougall said while investors made a return to the market last year, they had largely been absent in a number of years before that, which had reduced the number of available rental properties.
According to CoreLogic analysis, investors comprised 32.6 per cent of mortgage demand by value in January 2022, up from a recent record low of 22.9 per cent, but below the decade average of 34.9 per cent.
“The main reason why many investors did not purchase properties from 2017 is that nationwide lending restrictions prevented them from doing so,” Ms McDougall said.
“At the time, the restrictions were mainly because of the strong property price growth in Sydney during the mid-2010s, however, the instigation of fewer interest-only loans as well as higher interest rates on investment loans impacted investors around the nation.
“At the same time, asking rents were mainly benign, so the combination of higher mortgage costs together with flat-lining rents were also an impediment to the investor market.”
SQM research showed the national residential vacancy rate fell to a 16-year low of 1.2 per cent in February, while rents around the country are increasing.
“Even with our international borders mainly closed over the past year, Sydney’s vacancy rate hit two per cent in February this year with the asking rent for houses soaring by 17.1 per cent over the past year, according to SQM Research,” Ms McDougall said.
“It’s not enough for political parties to simply offer piecemeal funding for ‘affordable housing’ when there is currently a critical undersupply of rental properties that was written in the cards in 2017 when lending restrictions came into play.”
Ms McDougall called on the incoming government to develop a sustainable policy to increase the supply of rental properties, similar to the short-lived National Rental Affordability Scheme.
“With overseas migration set to soar over coming years, where are these new Aussies going to live if we don’t even have enough rental properties to house our current population?” Ms McDougall said.
“A system needs to be developed to encourage the private and public sectors to work collaboratively together to increase rental supply and to improve rental affordability for tenants.”
Real Estate Institute of Australia (REIA)
Speaking as part of the REIA’s new ‘Australian Property: Our Future’ campaign, Mr Groves said a national housing plan involving all three levels of government was needed to address the issues.
“In the recent Housing Inquiry Report, all three of REIA’s recommendations were taken into that report, which included axing stamp duty, greater opportunities for first home buyers, and also included increasing supply and housing in this country,” he said.
“We want greater prosperity through homeownership, we want strong small businesses, and we want thriving communities.”
Mr Groves said more also needed to be done to upskill the workforce to address the property manager shortage and tackle stamp duty reform, which could increase supply on the market by up to 40 per cent.
On a positive note, Mr Groves said buyers were bucking the traditional pre-election market slowdown, driven by bipartisan support for negative gearing and investor lending at record highs.
In the leadup to the 2019 Federal Election, Mr Groves said the REIA ran a campaign highlighting how changes to negative gearing and capital gains tax would seriously impact supply and affordability in the property market.
This time around, he said the “unprecedented” level of bipartisanship for negative gearing and a more stable and supportive tax environment, would give buyers peace of mind.
“Buyers are backing Australia’s housing market, with total investor loan commitments of $10.8 billion in February sitting just under the record loan commitments we saw in January 2022,” Mr Groves said.
“While it’s a very different market to the pre-election softening in the lead-up to the 2019 Federal Election, where uncertainty around negative gearing led to a major drop in investor confidence, rising stamp duty taxes continue to be prohibitive for owner occupiers.”
Mr Groves said the recent Federal Budget contained an expansion to the Home Guarantee Scheme, which supported first home buyers, and dealt directly with inflationary pressures, while containing modest outlook on interest rates.
“Home ownership is part of the Australian way of life, with the benefits of buying a home extending well beyond the individual,” he said.
“Home ownership is a long-term game that secures wealth for generations to come.
“Property remains a standout investment for homeowners, with values in 2021 increasing at the highest rate in two decades.
“The estimated 15 per cent of households considering entering the market should feel optimistic about the future of property, with home ownership a clear pathway to reducing hip pocket challenges.”
Geoff Lucas – The Agency
The Managing Director and Chief Executive Officer of The Agency, Geoff Lucas said there had been a peak in supply coming to market but he expected that to taper off heading into Easter and the Federal Election.
“Moving into the election we think supply will soften and transaction volumes will soften,” he said.
“However, what we’re then seeing is interest immediately after the election.
“The discussions we’re having is that vendors are keen to see the election out of the way, and then there will be a resumption of activity, which we think will be quite healthy.”
Mr Lucas said the recent slight cooling of the Sydney and Melbourne markets was “a good transactional market” and stood it in good stead for a solid return in activity after May 21.
“People are now getting conditioned to the understanding that the market is not going to run away from them,” he said.
“So that allows them to be more comfortable to transact. That’s what we’re seeing. So we do expect the resumption of good volumes, pretty shortly after the election.”
Manos Findikakis – Eview Group
Eview Group Chief Executive Officer Manos Findikakis said he doubted the market would experience the traditional pre-election slowdown.
“The traditional slowdown probably won’t occur,” he said.
“I think we’ve got to be aware of it, but not be overly concerned with it. I think we’re talking about it more than what we will probably see.”
Mr Findikakis said the sector was likely talking about a slowdown as that has what occurred in the past, but this time around he tipped most voters had already made their mind up about the election.
“I think the political arena, at this point in time, has been top of people’s minds and I think they’ve already made their decisions long before the government goes to election,” he said.
Angus Moore – PropTrack
“I don’t think we’ll see much of an impact on buyer or seller confidence or on market conditions,” Mr Moore said.
“There aren’t a lot of housing-specific policies that have been flagged for the election, so we’re unlikely to see that weighing on either side of the market.
“Neither party has flagged any major changes to housing policy that would affect either how first-home buyers were going to approach the market or investors or existing vendors looking to upgrade.”