New housing supply ideas LJ Hooker Group draws up a list of six ways to address the rental market crisis

l RENTAL MARKET

| Nick Dalton

ONE of Australia’s leading real estate brands has drawn up six possible solutions to increasing Australia’s housing supply.

LJ Hooker Group’s head of research Mathew Tiller said new thinking was needed with the rental market currently impacted by an unhealthy imbalance between demand and supply post-pandemic.

“The number of rental homes in Australia increased from 2.2 million in 2011 to 2.8 million in 2021 – that’s 24 per cent growth in ten years,” he said.

“This shift can be attributed to changing economic conditions, demographic shifts, population changes and housing affordability,” Mr Tiller said.

He said since the beginning of 2020, rental demand in Australia had experienced significant fluctuations, influenced primarily by two factors: overseas migration and changing household dynamics.

“To address rental market challenges, solutions should focus on housing supply including maximising the utilisation of existing homes and constructing quality built new ones of the right size in targeted areas,” he said. “Unfortunately, the outlook for new housing is not positive with the number of new dwellings being approved continuing to decline.”

The six strategies for increasing much-needed supply include:

1. Governments can directly fund or build homes, acting as developers or financing private developers to build new homes.

2. Increasing the supply of social, community and affordable housing is required particularly in the less affordable inner-city areas and rapidly growing regional markets.

3. Planning and development incentives should align new housing supply with population growth, prioritising locations with tight labour markets and low rental vacancies.

4. Incentivising long-term leases to provide security and stability for tenants. Landlords could be encouraged to offer multi-year leases, similar to commercial properties, spanning three, five, seven or 10 years. Special clauses, such as a make-good clause, could be added allowing tenants to change the interior as long as the property was returned to its original condition on the expiry of the lease.

5. Increase build-to-rent incentives for large-scale builders and institutions to construct rental accommodations specifically to rent.

6. Balancing short-term accommodation with the need for permanent long-term housing in regional ‘tourism’ centres.