Suburbtrends Rental Pain Index May 2024: Urgent Action Needed as Rental Crisis Deepens
The latest Suburbtrends “Rental Pain Index” for May 2024 uncovers the escalating severity of the rental market crisis in Australia. As rental prices continue to climb and homes remain scarce, the report highlights the urgent need for comprehensive solutions to alleviate the stress on renters throughout the nation.
Kent Lardner, founder of Suburbtrends, delivers a critical analysis and a dire warning about the future implications of current policies: “This month’s data signals a looming reckoning for the political class, who have long neglected the growing distress of the renter class. The barriers to homeownership are especially daunting for first-time buyers without familial financial support, leaving shared equity schemes in capital cities as one of the few remaining options—yet many will still find these schemes out of reach.”
The data illustrates a disturbing trend:
- In Western Australia (WA) and Queensland (QLD), rental pain indices have escalated to 85.71% and 81.39% respectively, underscoring the acute stress felt by renters.
- South Australia (SA) and Victoria (VIC) are also experiencing significant increases in rental stress, with the index rising sharply, indicating that the crisis is widespread across major population centers.
Kent emphasises, “Our immediate focus must be on implementing emergency accommodations and creating incentives for homeowners to offer underutilised properties for rent. These measures are crucial stopgaps that can provide some relief in the short term.”
He elaborates on strategic solutions: “To address the twin challenges of availability and suitability, we propose tax incentives or financial benefits for homeowners to bring under-occupied houses into the rental market. This approach not only maximises the use of existing housing stock but also alleviates some pressure from the rental market.”
Kent concludes with a powerful call to action: “As the construction of new homes lags behind demand, exacerbated by stringent building codes that drive up prices, we find ourselves at a critical juncture. We must act decisively to deploy emergency shelters and rethink our housing policies to include more immediate, practical solutions such as mobile home villages and prefabricated homes. The time to act is now, to prevent a deeper crisis where more Australians face the grim reality of homelessness.”
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8 comments
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Andrew Smith
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wam
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Tone
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Terence Mills
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Tone
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Clakka
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New England Cocky
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Andyfiftysix
Return to home pageSymptoms of generations of underfunding emergency, temporary, public and social housing by state governments, fit for the growth in the permanent population especially middle aged and older who are living longer (not the high NOM net OS migration churn of students), while worshipping the FIRE sector, ‘home ownership’, more but smaller households and zoning restrictions.
Related, middle and older generations longevity continues, but ‘the big die’ will commence soon e.g. started the tick upwards and will continue for two decades 7+ million, to be followed by lower fertility outcomes in the permanent population; the great rebalance including ‘skip’ power?
limit investment properties to ONE that will release hundreds of thousands of dwelling?
If the plan is to destroy the middle class, then it’s essential to roadblock access to one of the most practical ways to facilitate the building up of equity, ie, buying a family home. This process began well before the year 2000. That is why much, if not all, government regulations are directed to protecting current asset holders at the expense of new entrants to the housing market. In the elite’s ideal world there’d be zero homes available for young families to buy. As an aside, I heard a segment of ‘Business World’ (?) yesterday mentioned that 40% of Cambodia’s GDP is making its way into speculating on the Oz real estate market. And yet people still vote for Labor & LNP. Go figure.
It’s not a shortage of housing it’s a shortage of available land to put the houses on.
In my local area pretty well all of the available, approved, land for housing development is owned by development companies who will only move ahead on development (water, sewerage, electricity connections and road and kerb construction) as and when demand indicates maximum returns. In the meantime they sit on the land and development releases only occur in trickles.
Clearly the developers are not going to release developments in accordance with community needs – their motivation is profit maximisation. So surely we have to pass the role of land development to non-profit providers (e.g. local councils) so that development of land can proceed based on community need and not solely the maximisation of profit.
What am I missing ?
TM, pass the control of land release AND development to Councils? Councils are also corporations so how can they be “non-profit providers”? My understanding is the Council Mayors have all signed onto the jerry-rigged Trojan Horse juggernaut being mis-steered by the UN under the guise of pie in the sky Sustainable Development Goals agenda.
What you are missing is the undeclared intent by a handful of narcissist wannabes to enslave the next generation. They want to convert 95 percent of home-owners into long-term renters. File their plan under ‘Neo-Feudalism. Whether councillors know this or not is in a way irrelevant.
With the spectre of ‘global boiling’ here now, it’s only a matter of time before Aussies are hit on the head with Climate Mandates – upgrade the home to be ‘global boiling’ resilient, and if you don’t have the funds, don’t worry, Blackrock Co will arrange something. And if people baulk at the Blackrock deal, I guess Albo the Great can conjure up something like a Clean Energy Finance Corporation loan for home energy upgrades and take proceeds of the sale of the home upon the death of the owner as final payment.
Like cattle filing into the holding pen of an abbatoir, each person believes they will be exempt from the trend. There are no accidents in this housing debacle, the actors are playing their roles nicely, smilingly. What kind of world are we leaving to the next generation?
Yes TM,
there has always been popular blame games against property developers. Mostly because little is understood about the business so it is seen as a ‘dark art’ operated by various ‘Darth Vaders’.
Property development is a competitive, and very high risk business, with the average cap rate on Oz estate properties of around 5% (better can be achieved on the stock market). The cap rate is highly susceptible to interest rate fluctuation, the price and availability of labour and civil engineering supplies.
Notions that non-profit providers / local councils can do the job is a dream. Local Councils currently struggle to obtain the requisite skill set and resources to carry out their regular business. And non-profit will be exposed to skill / experience shortage, and wouldn’t stand a snowflake’s chance in hell in having the critical mass to cope with the risks. Maybe co-operatives like the Mondragons might have the grunt, but still, does the will and wherewithal exist?
Once there used to be ‘sell off the plan’ schemes devised by non-trad developers in the 70s and 80s, often done before any ground had been broken. ‘Great idea, everyone’s a winner’, except when things stalled, the developer slipped into the night, and the purchaser was left in tears before bedtime for years, out of pocket.
‘Land Banking’ per the trendy parlance, is far from the primary objective of the business. Like in any other business, the holding of an asset without a return on it is counter-productive and very costly. And it is a very complex decision for a developer to purchase acreage released for development – there will always be a bidding war. Sometimes to attenuate holding costs they can purchase ‘options’ or enter ‘Joint Ventures’ with the acreage seller, but this can increase the risk because of issues of liquidity, competence and reliability of the seller.
Turning the acreage into estate blocks for housing is complex and expensive. The average cost per vacant block to do so is around $180-250k dependent upon location and geography etc. These costs have increased by about 20% since 2021, and are set to increase further, leaving the risk of projects being shelved.
In the ever-changing environment of construction statutes, planning provisions, and opaque ‘community contributions’ and amenity sought by municipalities, and protest and objection by any Tom, Dick or Harry with an axe to grind, it’s a ‘people’s republic’ minefield to navigate. Ordinarily, that may take a couple of years, but could easily blow out to 5-10. In addition there are substantial upstream issues that need to be negotiated, resolved, integrated and implemented regarding services feed-in infrastructure, such as roads, public transport, water, sewerage, power and communications, all a very complex planning and engineering exercise with disparate organizations (sometimes privatized) that all need to be harmonized to best affect in the process of development.
Whilst the standards and statutes have been increasingly upgraded (some of the best in the world) to meet the expectations of a utopian paradise, they go to modern complexity, and become hugely expensive, and coupled with the ‘keep up with the Joneses’ syndrome, folk are inclined not to downsize, giving rise to McMansions (fat sausages from the fat sausage factory), forsaking efficient and effective design. Now with climate change, substantial global economic pressures and housing shortage upon us, there’s a mad rush to amend the standards and statutes to give affect to downsizing, more efficient and effective design and to streamline all the processes, removing the strangulation points as much as possible. But this ‘mad rush’ has just begun, with little brought to fruition.
All nightmares pass, but in this instance it may take a decade or two. So in the meantime, to attend to the crisis, quick fixes like factory-built affordable housing to be placed on non-permanent ad hoc serviced crown land may provide an interim solution – emergency statutes would be needed.
@ Tone: I doubt that councils are ”corporations” because the collection of rates is unconstitutional since 1942 when the powers of taxation were passed to the Cth.
@ Terence Mills: There is no ”shortage of land” in Australia. Go to any regional centre and enjoy the wide open spaces, the clean air and the lack of traffic chaos (except between 8:15AM and 8:30AM at the main town roundabout when traffic jams up to seven vehicles may occur).
@ Clakka: Residential development costs are very expensive because local councils have exorbitant charges on DAs and other associated documentation> I will seek out our local Council costs if possible ….. they are more expensive than lawyers.
The Local Government Act (1993) NSW describes councils as ”corporations” in parentheses, recognising this faux legal status.
The feral LABOR government needs to grow some political testicles and grandfather negative gearing with the exception of fresh new residential property builds after a proscribed date. That way investors currently holding property will be able to divest in an orderly manner. The grandfathering strategy was done when the CGT was introduced in 1985 without any ructions to the market.
the job is too difficult to get done. A total housing reset is needed and that means a collapse of house prices. Capitalism needs rejuvenating the old fashioned way. It means we get the fuck out of real-estate as an investment asset for retirement. You suddenly got an extra $500,000 that you dont have to borrow. The only losers would be Banks and people who are suddenly in the negative. I would support those in the negative and let the markets deal with banks. We werent afraid to dump taxi owners for grab……..