It’s a great time to be a landlord
One could be forgiven for thinking we’re currently living in ‘upside-down world’. We’ve come out of a two-year Global Pandemic, only to be met with record-high property prices, ridiculous inflation and increasing interest rates.
There have been multiple housing construction and building companies going belly-up due to the increased cost of building materials and delays in getting these materials. The remaining builders are taking on fewer jobs, but with better margins as they navigate uncharted waters.
Throw in unprecedented housing price increases and monthly interest rate hikes and you now have all the ingredients for a reduction in home ownership.
Simply put, as new builds slow down and first home buyers are priced out of the market, there are more renters fighting over fewer rental properties.
All one has to do is look at the cause of the current global inflation crisis to understand why rental prices have been going up quickly over the past 12 months – less supply, more demand. This has been created by some major shifts in careers (creating a significant shortage of labour) during the pandemic which have affected manufacturing, procurement, and logistics. Add to this the war in Ukraine impacting petrol prices globally and top it off with weather disasters such as floods and droughts across many parts of the globe.
Compared with 2015/16 figures, home ownership is down 2%. Not much of a slip, however when compared with the mid 90s when home ownership was sitting at around 71%, recent figures indicate a drop of 5% (down to 66%). The largest rental demographics are the 15-24 and 25-34 age brackets.
According to recent ABS household lending data (May 2022), owner occupier first home buyers made up 31.7% of all purchases. This is significantly down on the 42% recorded in December 2020.
First homeowner incentives by the government pop-up from time to time. However, as prices continue to sale north, they become less affective. In 2021 approximately one in ten first-home buyers were backed by government schemes but a quarter of buyers failed to find a home under the Home Guarantee Scheme (which includes both the New Home Guarantee and Family Home Guarantee).