RENTAL IMBALANCE

A DIRE shortage in the availability of rental accommodation across the State sees increasing numbers of prospective tenants competing to find a roof over their head.

Unfortunately, a dire shortage of property at the lower affordable end of the market is increasing tension and demands from the social and charitable sector for rental reform and control.

The major issue being that the shortfall in our Public Housing is placing immense pressure on the affordability at the mid to lower end of the market.

What is concerning is that the number of properties that make up our residential rental sector is well under what one would expect but the size of our market and demand over past decades has not seen any real need for it to grow.

About 25 per cent of our dwellings make up the rental sector.

In Melbourne this is over 40 per cent and in Sydney in excess of 50 per cent.

To accommodate current demand we need it to grow to a minimum of 30 per cent.

Over the past three years residential investment sales numbers have retracted from 2504 sales in 2018 to 1739 in 2020.

In 2021, investor sales represent just

18.3 per cent of total sales.

At a time when we need new residential investment numbers to grow in this state, we instead see numbers declining.

There are a number of reasons for this: • Investment returns on local residential property has declined to a level where investors are looking at alternative locations where they can achieve better returns

• Unfavourable tenancy legislative conditions that prejudice landlords

• Both the above have prompted some landlords to move their investment from long term rental to Airbnb (over which they have more control over the property).

• Covid-19 Tenancy Legislation adversely affected landlords and has encouraged some investors to wait.

• The failure of all levels of government to encourage development and provide incentives for private landlords / investors to take up investment in real estate. Stamp Duty and, land tax are major inhibitors but so are planning and approval processes with the extreme red tape and costs that go with it.

Few people stop to consider that the vast majority of Tasmanian investors are mums and dads or young people who have opted to use investing in real estate as a means to create financial freedom down the track in later life.

Data from the Australian Bureau of Statistics dispels the myth the investors are all wealthy beyond the dreams of the average person.

Instead, the data shows that 80 per cent of our investors have less than two investment properties and that their average wage is below $80,000.

Real Estate Institute of Tasmania statistics suggest that real estate agents manage more than 83,000 rental properties across the major population centres in Tasmania.

The rental market is very “tight” with vacancy rates at all time lows.

Southern Tasmania has 652 properties available for rent (1.6 per cent vacancy rate), the North 313 (1.2 per cent vacancy) and the North West 321 (1.9 per cent vacancy).

That’s just 1286 properties available for rent out of 83,000.

The vast majority of the properties, which are vacant are at the top end with very few in the mid to lower ranges.

Over the past decade we have seen Hobart’s median housing price grow 79.4 per cent — from $337,250 in 2011 to $605,000 in 2021 — while rents have grown 41.2 per cent.

In 2011, Hobart’s vacancy rate was 3.1