AUSTRALIA’S ANNUAL RENT BILL BLOWS OUT BY $44 BILLION PER ANNUM OVER THE LAST DECADE

Kevin Young, President of Property Club, Australia’s largest independent property investment group, has highlighted a concerning trend regarding the fnancial strain faced by renters across Australia.

According to Mr. Young, a government-engineered rental crisis has resulted in an additional $44 billion per year being imposed on renters nationwide.

Over the past decade, the median weekly rent in Australia has doubled, skyrocketing from $300 to over $600. This exponential increase means that Australian renters collectively

- The Problem and Solution to the Rental Crisis -

shell out nearly $250 million in rent every day. Meanwhile, full-time adult average weekly earnings have only risen by 30 percent during the same period, reaching $1953. This stark contrast illustrates that rents have surged at more than three times the rate of wage growth.

Mr. Young points out that this rental crisis is especially burdensome for low and middleincome renters, who struggle to keep up with rising rents amid other cost-of-living pressures. He predicts that the situation will worsen with a signifcant infux of migrants to Australia, exacerbating the housing demand-supply gap.

To swiftly address the rental crisis, Mr. Young proposes two key policy reversals by the Federal Government.

Firstly, he calls for the reinstatement of depreciation benefts associated with owning second-hand properties, which were abolished in 2017. This change disincentivized property investors from purchasing cheaper second-hand rental properties, thereby reducing the availability of affordable rental options.

Secondly, Mr. Young urges the Federal Government to reintroduce interestonly lending without time limits for property investors. The imposition of time limits on interest-only loans by the Australian Prudential Regulation Authority in December 2014 forced many mom-and-pop property investors to sell their rental properties, as they could not afford principal and interest loans after being forced to switch repayment methods.

Mr. Young warns that without prompt action, rental prices will continue to soar, potentially driving thousands of Australians into homelessness. He emphasizes the urgent need for the government to reverse these detrimental policy decisions to prevent the rental crisis from escalating into a nationwide homelessness crisis.

Record High: Australian Property Prices Surge Despite Increased Listings

The latest data from the PropTrack Home Price Index reveals a robust surge in property prices across Australia during March, even amidst a rise in property listings as homeowners aimed to capitalize on the prevailing strong market conditions in most capital cities.

Australian home values experienced a notable increase of 0.34% in March, with the median price in capital cities rising by 0.4%. This upsurge has propelled Australian property prices to reach unprecedented highs, building upon the gains observed in the previous month.

Sydney, Australia’s most expensive city, witnessed a remarkable 8.61% surge in house prices over the past year, driving the median value of a typical house to $1.369 million, marking a substantial increase of approximately $111,000 compared to just a year ago. Similarly, property prices in Perth, Brisbane, and Adelaide have also soared to record highs, according to the latest data.

PropTrack’s senior economist, Eleanor Creagh, attributes this surge in property prices to the persistent demand from homebuyers, which has effectively absorbed the surge in property listings, resulting in further price escalations.

Despite an increase in the number of homes hitting the market, the demand-supply imbalance continues to exert upward pressure on prices.

The Reserve Bank’s decision to maintain interest rates steady last month, coupled with expectations of potential interest rate cuts in the future, is anticipated to further fuel home buying activity. The prospect of lower interest rates is likely to bolster buyer confdence and stimulate the housing market.

In Perth, where housing supply remains constrained, strong population growth has driven property prices to unprecedented levels, recording the highest home price increase among the capital cities in March. The Western Australian capital now boasts the strongest property market in the country, with house prices surging by 19.25% over the past year.

Amidst these market dynamics, the unit market has also witnessed signifcant growth, outpacing house prices with a 2% rise so far in 2024. The relative affordability of units, coupled with strong demand for inner-city living post-pandemic, has contributed to the buoyancy observed in the apartment market. As property prices continue to surge and market conditions evolve, the Australian real estate landscape remains dynamic, presenting both challenges and opportunities for homebuyers and sellers alike.