Realtisan Weekly Recap: Vacancy Rates Hit Historic Lows, Renters Face Growing Crisis

Weekly News

  1. The New South Wales government advances public housing maintenance management reforms to enhance the quality of housing services.
  2. Vacancy rates fall to a historic low, intensifying the crisis for renters.
  3. A renowned economist suggests: To address the housing crisis, Australia needs to slow down immigration.

The New South Wales government is advancing reforms in public housing maintenance management to improve the quality of housing services.

The New South Wales government is embarking on a comprehensive reform of maintenance management for public housing, where tens of thousands of residents live. This initiative aims to shed its reputation as the state’s worst-rated landlord. The maintenance tasks for public housing, previously undertaken by private contractors, will no longer be renewed. Instead, the Labor Party plans to establish a centralized maintenance hub to handle repair requests specifically.

On the 13th, the NSW government announced the establishment of a new government agency, Homes NSW, which will screen maintenance requests from private contractors and issue work orders to effectively control the backlog of repairs. A government-operated call center and application, set to launch in mid-2024, will be used to track maintenance requests for the state’s 95,000 public housing units.

Rose Jackson, the NSW Minister for Housing, expressed her deep concern about the long waits many public housing tenants face for basic repairs. She criticized the state government for becoming one of the worst landlords in the state due to years of neglect and mismanagement.

Chris Minns, the Premier of New South Wales, emphasized that the government is committed to addressing the state’s housing crisis, including improving the overall quality of social housing. He noted that everyone deserves a safe and stable home, and should not have to struggle to obtain basic maintenance services.

It’s noteworthy that the Labor Party won the March election on a platform opposing privatization. The party argued that outsourcing contracts and the sale of assets in key sectors like transportation and energy are disadvantageous to taxpayers. Additionally, earlier this month, there were reports that the government would not renew its contract with the private operator of the Junee Correctional Centre, marking the end of nearly 30 years of private management at the facility.

Vacancy rates fall to a historic low, intensifying the crisis for renters.

As the number of rental properties available across Australia continued to decrease last month, renters considering a move are facing an increasingly tough market environment.

According to the latest PropTrack data, the national rental vacancy rate in October fell to a record low of 1.02%, down 0.06 percentage points from the previous month, significantly below the 3% standard considered indicative of a balanced market.

This trend not only broke the record set in September at 1.10%, but also indicates that the tightness of the rental market is intensifying. The rental crisis is worsening due to the pace of housing construction not keeping up with the demand for Australian housing from overseas migrants.

Renters are not only facing pressures of the cost of living but also dealing with continuous rent increases, or being forced to move due to landlords selling properties and exiting the market.

Anne Flaherty, a senior economist at PropTrack, noted that the plight of tenants worsened last month, with the vacancy rate for rental properties dropping to the lowest level on record. For over three years, the national vacancy rate has been declining. Considering the strong population growth and the slowdown in new housing supply, this trend is likely to continue.

In October, only 1.02% of rental properties were vacant nationwide, with New South Wales, Victoria, and Queensland all recording historic lows in vacancy rates.

However, increasing yields might attract more investors to the market, which could mean more rental housing supply for tenants.

Despite the decrease in available rental properties, rents have continued to rise. As of the end of September 2023, the median advertised weekly rent on nationwide reached $550, increasing 3.8% for the quarter and 14.6% year-on-year. The rental market is so tight that some renters are willing to offer above-market rents to secure housing.

This tense situation in the rental market poses challenges not only for tenants but is also a significant issue for the government to address and solve.

A renowned economist suggests: To address the housing crisis, Australia needs to slow down immigration.

In a deep dive into Australia’s increasingly severe housing crisis, renowned economist and former Deloitte Access Economics partner Chris Richardson has offered a noteworthy perspective. In his column for the “Australian Financial Review,” he calls for a slowdown in immigration to allow housing supply to catch up with the growing demand.

Chris Richardson, an economist who has worked with the Federal Treasury and the International Monetary Fund (IMF), said he was reluctant to write the article because immigration is typically not the root of the problem. However, given Australia’s historically low levels of housing affordability, he believes adjustments may be needed in immigration policy to mitigate the impact on the housing issue.

In the 2022-23 fiscal year, Australia’s net overseas migration reached a record 500,000 people, far exceeding the expected 235,000. This surge was primarily due to a significant increase in the number of international students. Concurrently, Australia is experiencing an unprecedented housing crisis, with tight rental supply, rising rents, and soaring house prices and interest rates making home ownership an elusive dream for many ordinary Australians.

Richardson points out that reasons for the housing supply shortage include the obstinacy of local councils and slow building approvals. He argues that even with “perfect housing policies tomorrow,” it would take at least a decade to bring house prices down to reasonable levels. Australia’s long-term poor decision-making on housing, such as local council delays in residential approvals, has exacerbated the current predicament. In New South Wales, despite a 20% decrease in building applications submitted to local councils, the time required for approval increased from 83 to 111 days.

A report by “The Sydney Morning Herald” indicates that to accommodate an additional 3 million residents over the next 18 years, Sydney and Melbourne will need to build at least 1.3 million new homes.

Richardson’s suggestion to slow immigration to ease housing pressures offers a new perspective on solving Australia’s housing crisis.

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