Unlocking housing supply, including improved use of existing properties and streamlined government planning processes to boost fast and effective development, are among the key recommendations from REA Group to solve the rental crisis in NSW.
In a new report, Measures to ease the rental market crisis, REA Group Senior Economist Paul Ryan said Australia desperately needed more homes and rental accommodation, and taxation of vacant or under-utilised properties could encourage their use.
He said government policy had started to recognise the need to enable more housing development, but state and federal tax changes were aimed at encouraging build-to rent projects to boost supply.
“However there remains a significant underutilisation of existing housing,” Mr Ryan said in the report.
“Sixty-eight per cent of homes in Sydney have a spare bedroom, and the majority of these are well-located, close to the CBD.
“Large disincentives prevent more efficient uses of well-located parts of Sydney.
“Existing residents are discouraged from selling by stamp duty, and pension eligibility costs, while new development is hampered by the costs and limitations of the zoning and planning system.”
The report comes after an REA Group workshop brought together rental market experts and industry leaders to provide insights into the challenges experienced on both the supply and demand side of the market and to offer solutions to the issues.
REA Group Chief Customer Officer Kul Singh said the program of work was in direct response to calls from customers to unite the sector behind industry-backed solutions to help inform policy and affect meaningful change.
“REA Group is in a unique position with access to our residential real estate and property developer customers, as well as Australia’s largest group of property seekers on realestate.com.au,” he said.
“We wanted to bring together diverse perspectives to look at the near-term and address what we can do now to ensure better housing outcomes for all Australians.
“A thriving rental marketplace benefits renters, investors, our customers, and ultimately, the broader Australian community and economy.
“We need to find more efficient and effective ways to increase supply, encourage investment, and attract and retain property managers in order to safeguard the rental experience.”
Another key solution to come from the workshop and highlighted in the report is the need for coordinated planning processes between local and state governments that are transparent, ambitious and encourage councils to facilitate fast and effective development.
According to the report, during the pandemic the government stimulus boosted building, particularly for detached homes on the outskirts of Sydney, but since then economic uncertainty, supply constraints and scarce resources have hampered development.
“Competition for rental properties remains strong with substantially more potential renters competing for each rental listing than before the pandemic in NSW,” Mr Ryan said.
“Rent increases, on top of general price inflation, are putting significant pressure on rental households with current conditions set to exacerbate financial stress.
“Compounding the issue, construction rates have slowed across the country with 72,000 fewer dwellings built since the onset of the pandemic compared to what would have been implied from pre-pandemic construction rates.”
Other potential solutions include greater consumer protections for newly built homes and maintaining incentives for property investment including consideration of the potential effects of regulation or rent limits on the provision of high-quality rental properties.
“The good news is, we are starting to see investors return,which is an important support for housing supply and shows long-term confidence in the market,” Mr Ryan said.
“Alongside these reforms, we can improve renter tenure security and the suitability of homes with a focus on energy efficiency and higher minimum standards.”