Unlocking Australia’s Housing Puzzle: A Call to Action

Hi Andrew Bell here and it’s great to be with you this fortnight.

It’s no news that we have a housing crisis for both renters and for those looking to purchase. In my role as a Director of the Real Estate Institute of Australia, we are really trying to work at the government level to get some meaningful action. On a national basis, it is clearly a matter of supply and demand. With an increase of over 500,000 in population last year, this was met with a decline in housing construction.

There are lots of reasons for that, which is everything from the delays in getting development applications and building approvals through local governments, to the huge rise in cost of building materials and in particular an incredible shortage in the lack of labour for construction work. Add to that, higher interest rates and incredibly small profit margins in building and fundamentally most developers don’t want a thing to do with development at the moment. You are probably reading about how many developers have gone to the wall in recent times.

Recently, Queensland was named as the state with the sharpest rise in unaffordability for purchasers. Well, that’s no surprise. Queensland was always renowned in being incredibly attractive to purchase property in because our property values were considerably lower than the rest of the country. But hasn’t all of that changed since the pandemic. The pandemic truly triggered the “coming of age” for Queensland. The northward migration of people from the southern states was unprecedented and continues today. Not only did we see the movement of people, but we saw an incredible movement of wealth. This is evident in suburbs such as Surfers Paradise and Broadbeach where 25% of all sales, of which many of them are up to $20 million plus, were purchasers paying cash. No borrowings. The exponential growth in our population and particularly by high wealth Australians, is the reason that our property values have risen so sharply and we are now starting to catch up to the capital cities in terms of value for real estate.

The same goes for the rental market. The problem is, all we have really seen from governments so far is a whole lot of talk. Every day the housing crisis is getting worse. Lots of talk about what could be done, but nothing is being done. The really alarming thing is that even if action is taken today, we wouldn’t see a property built in the next two years. This housing crisis has a long way to go. We are almost 100% dependent on private enterprise to step up, yet the environment is not right for them. The risks are too high and we simply have to make the process more attractive to entice developers and their backers into the market. I am calling up on councils and governments at state and federal level, to change their whole thinking.

The market that needs to be most addressed is affordable housing. The top end of the market is looking after itself, but it’s the everyday Australians who are really feeling the brunt. Local councils need to make sure approvals are processed rapidly, infrastructure chargers are slashed and perhaps even council rates and fees reduced for a period of time. At the State Government level there needs to be concessions on stamp duty and changes around land tax. Where there are blockages at council level, the State Governments need to override it. At the Federal Government level there needs to be more tax structuring and indeed even adjustments to GST to oil the wheels and get our process of construction moving far more rapidly than what is happening today. Of course some people feel that the answer to the supply and demand equation is to radically cut immigration. Yet we have a problem. Right across all spectrums of our economy, from our armed forces, to our police forces, to our medical system and indeed construction and just about every part of our economy, right down to coffee shop owners, are hampered by a lack of recruitment.

The people don’t exist for the jobs that we need to make our economy function in a strong way. Cutting immigration might slow demand for real estate but it will sure have a negative effect on the economy. A catch-22 situation. We can have our cake and eat it as well. We can bring in the new immigrants needed for the jobs not being filled at the moment. And we can deal with the housing crisis by simply accelerating construction levels, and that will only happen through the combined efforts of local, state and federal governments. The Real Estate Industry of Australia will continue battling, to try and push those changes through but we know governments move slowly and they are more likely to get in the road with stop signs, rather than being the initiators of acceleration. Here we go.

We’re in May and it’s almost the middle of the year. Here at Ray White we are doing everything we can to try and provide buying opportunities for all of those looking for a home. Of course we held The Event in January with 130 properties offered to the market and we are so happy to get so many people into their new properties. We have just backed that up with a further 100+ properties going to auction last week. Incredibly strong activity, but again pleasing to find homes for another 100-odd families.

Likewise for renters. We have been working really hard to track down new landlords into the market, but I will give you one example of how strong the demand is. We advertised one property on a Thursday and by Sunday evening, we had received over 500 enquiries and by Monday morning, 37 written applications. Who would have thought five years ago we would ever see anything like that.

See you in a fortnight’s time.