There has been a lot of press coverage in the past about Australia’s rental crisis and I have been asked my opinion. Yes, there is a rental crisis, when you consider that my clients are getting the best rental returns in my last 30 years in this business.
Here is an example
The last 5-bedroom executive house I built sold for $490,000 and is renting for $510 per week to a couple with no children. This may sound strange and you might ask why a couple would pay $510 per week for a 5-bedroom house?
To clarify, this home has a master bedroom at one end, three bedrooms at the other end and a large 5th bedroom come utility room in the centre of the house. Apparently this couple just enjoy the quality of the house, the aspect and the location.
The media have been reporting that in many parts of Australia people were paying up to 65% of their income on rent.
What has caused this?
Recently I wondered what planet the Government advisors lived on when they had the Australian Prudential Regulation Authority (APRA) put pressure on the Banks to not lend for investment housing.
Rental properties supply and demand
I always say that ‘supply and demand’ influences the price of everything.
Let’s run through the cause and effect of rental costs.
Supply and demand chart drawn on a blackboard.
If the Government restrict the supply of investor rental properties, what happens? Supply is restricted causing demand for rental properties to exceed supply. When rental demand exceeds supply, rents increase. When rents increase demand from investors increase. If demand for housing from investors goes up, the price of housing increases.
In North Harbour, Brisbane, where I am building now, demand is so high builders are fighting to get tradies. It is going very well and I still have stock in Stage 2 and the next available is in Stage 6 for those looking for quality residential investment properties.
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I hope that this clears up any confusion regarding rental properties supply and demand and the cause and effect of rental costs. If you are interested in enquiring about investing in property and would like to know ‘how it works’, you are welcome to speak to me about your options. Please contact our office to schedule a free, no obligation consultation and find out if our service is suitable to your needs.
Steve Taylor
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the subject being discussed. The figures stated in this article were accurate at the time of publication. For up to date figures, please contact our office.
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