Written by: Frank Days
Affordable rentals is the latest fall out of the governments interference into the free market by detracting offshore and mum and dad investors with new legislation and regulatory requirements. And we are only seeing the beginning.
For years we have been hearing how first home buyers have been locked out of the property market by the greed of the investor and the curse of foreign investment in our market. For years I have been writing the reality is internally most of us don’t want property prices to drop regardless of what we say outwardly. What would happen to OUR investments, how will this impact MY mortgage rates, why are you attacking MY superannuation plan? Well they did, we have, and now we are seeing the impacts of those misguided decisions.
The government changed the rules and costs associated to buying OTP properties for foreign investors on July 1st last year. In the words of Tim Gurner, “Don’t think sales have slowed since July 1, they’ve stopped!”. Now I’m sure there are some out there who are thinking “How good is that? More stock available for me, and maybe the developers will have to drop their pants before they find a buyer???” Well there may be a little truth in that in the short term as developers look to unload already constructed stock or stock that Chinese buyers have been unable to settle on due to these new restraints, but the overall impact will be negative.
Already developers like Jonathan Hallinan have opted to focus more on commercial projects. Tim Gurner has turned his eye to the “downsizer” market which is high end stock that will be out of reach for most mum and dad investors or first home buyers. Projects like the Mayfair on St Kilda Rd with 1 bedders a bees dick short of $900,000 will become the norm. Little Projects are about to do their first ever hotel moving their resources away from the residential market for now.
So what does this mean?
It means less “investor stock” available. Less investor stock means less availability for tenants, particularly affordable rentals, with vacancy rates at all time lows and heading south this will be a major social issue in the very near future.
So whats the solution?
Not for profit groups like Launch Housing, Womens Property Initiative, Magpies Nest, Hanover, Salvation Army, Anglicare and Uniting Church (there are many more) are doing their best to provide affordable housing, but the demand outstrips any supply they can provide.
Modo Project Builders have designed a product that goes a long way to providing a simple solution, not just for those looking for affordable accommodation, but investors looking to find an asset that will benefit from capital growth AND provide a positive cash flow, whilst being part of the solution. There are also tax benefits to be had by providing affordable housing. These homes are modern and fit into any streetscape and provide modern, self-contained accommodation options at affordable rates.
If you want to be part of the solution instead part of the problem please feel free to contact me today to discuss options.