- Rental vacancy rates have hit a 16-year low, according to SQM Research
- Investors made up 32.6% of mortgage demand by value during January - a rise from the low of 22.9%
- PIPA Chair calls for both sides of politics to commit to a plan to bolster rental supply
With the first official day of the election campaign in full swing, the issue of significant undersupply in the rental market has been raised by an industry body.
Rental vacancy rates for residential property has hit a 16-year low due to constrained stock fuelled by the lack of property investors over the past five years, according to new research.
Nicola McDougall, Property Investment Professionals of Australia (PIPA) chair and The Property Tribune contributor noted that while investors returned to the market last year, many had been absent for a number of years, which had reduced supply stock for rent nationally.
CoreLogic data shows that investors made up 32.6% of mortgage demand by value in January of this year. This is up from a record low of 22.9%, but still below the decade average of 34.9%.
“The main reason why many investors did not purchase properties from 2017 is that nationwide lending restrictions prevented them from doing so,” said Ms McDougall.
“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.
Nicola McDougall, PIPA
“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.”
1.2% national vacancy rate
Data from SQM Research paints a very dark picture.
National
The national residential property rental vacancy rate was just 1.2% in February. Available rental properties plunged in Melbourne and Sydney CBDs, while asking rents in the capital cities have soared by 9.4% over the year to March.
“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.
Ms McDougall has called for political parties to develop sustainable policies that increases the supply of rental properties.
“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.”
Nicola McDougall, PIPA
“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?
“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.”
