The current housing and rental crisis Australians are experiencing is the product of several factors:
- Inadequate Supply Planning
- Increased Government Taxes, Charges for Developers / Builders
- Higher Material and Labour Build Costs
- Increased Population Growth
- And finally, an especially key factor is the increased Government and Regulator market interference, which I’ll briefly highlight below with the following example.
Before you read further, please know that your voice is crucial! Take a moment to complete the 10th Annual PIPA Property Investment Sentiment Survey by clicking here. Your input will be vital in shaping the future of property investment in Australia.
Based on ATO data, the number of individual property investors has slowed by two-thirds in the past 5 years compared to previous 5-year periods as highlighted in the table below.
| 5 Yr. – Financial Year Period | Avg. Annual Net Increase in Individual Investors | Avg. Annual Net Change % in Individual Investors |
| 2003 - 2007 | 56,289 | 4.08% |
| 2008 – 2012 | 60,167 | 3.64% |
| 2013 – 2017 | 60,360 | 3.07% |
| 2018 - 2022 | 22,386 | 1.02% |
Just in the two five-year comparisons this data shows a staggering 66.78% decline in new property investors entering the market, which is impacting rental supply and overall housing availability.
Interestingly, when you broadly assess the economic and market climate over this 20-year period, it doesn’t look too different from the 20 years before. There have been typical market cycles, usual interest rate movements to slow or speed up the economy, different political parties in power at both federal and state levels, financial crises, geopolitical tensions—the list goes on.
The only unexpected difference was the COVID-19 pandemic. However, with government support protecting jobs through the most difficult periods of the pandemic, property prices actually outperformed expectations during this time.
Yet, the number of new investors has continued to decline. Why?
The conclusion I have drawn from this is two-fold:
- Increased Perceived Risk: Yes, with increasing prices, some investors might think this increases risks (which is a trade-off for the higher dollar returns they might enjoy).
- Government / Regulator Market Interference: This interference comes in the following forms:
- APRA lending restrictions
- Government increased in taxes and charges (Land Tax / Stamp Duties)
- Government Tax Reforms – (or the threat of future reforms)
- Tenancy Law Reforms – Owners losing more controls over the asset they own – such as No Ground Evictions, automatic pets in property and tenant able to make modest alterations, and finally harder to evict and recover bonds from poor tenants
- Minimum Standards Reforms – Increase holding and operating cost
It is clear to me that all levels of government are under pressure to solve the housing problem. But in the process of their solutions and reforms, they have forgotten to engage with the second biggest market player - the property investor, (who runs their small private rental accommodation business). We ‘Property Investors’ contribute tens of billions of dollars into the property sector every year, adding to the critical supply of rental accommodation.
What the Government & Regulators are currently missing, is that the data is clearly telling them, that if they keep this approach up, even less investors will choose residential property as their means to invest to provide financial security for themselves and their families.
Of course, this will only exacerbate the current supply problems if they do not choose to change course now. But the politics of the situation is challenging, so they need more evidence, like the ATO data.
Yet, that ATO snapshot by itself is not going to move the dial. They need to hear from us (the property investor), and they need to know how we are feeling AND acting right now, based on all the changes and challenges we face.
Without this feedback, we could see further dumb moves in trying to ‘fix’ the problem, rather than letting the market operate without too much interference.
This is why I am urging you to take just 20 minutes to complete the 10th Annual PIPA Property Investment Sentiment Survey. Your voice, ideas and concerns must be recorded and then pushed out to the media, governments, politicians, and regulators.
Even if you’ve participated in previous years, this year is more critical than ever. I’ve personally been involved in helping construct this year’s survey, and I can tell you that there is a real focus on how the Government interference is impacting sentiment and actions of property investors.
Here is the link to complete the survey: https://www.surveymonkey.com/r/2024PIPAInvestorSentimentSurvey
Please complete it and also forward it on to other existing, past, or future property investors as well. The more responses we gather, the harder it will be for the media, government, and regulators to ignore the results!
The survey closes soon (17th August), so please act now.
As a property investor, ongoing changes will affect your current and future returns, so you have direct skin in the game in terms of what government and regulators. If that’s not enough motivation, I am not sure what is.
I appreciate your attention and time, and I thank you in advance for completing the survey and adding your opinion and voice to this important debate. Thank you, Ben Kingsley Chair of PICA
