31 March 2016
- In the past 12 months, Victoria’s population has grown by more than 100,000.
- There was a 9.5% decrease in new lettings in Loddon-Mallee region at end of 2015
- Private investors provide a quarter of all properties in the Swan Hill region
- Public housing (provided by the government) provides only 5.4% of Swan Hill District’s rental housing needs.
It may come as a surprise, but as Victoria’s population continues to grow strongly, it’s the “Ma and Pa” property investors who are stepping up and providing the lion’s share of much needed rental housing.
25% of Victorian houses are owned by private investors providing rental opportunities for those who either cannot afford to buy or choose not to buy. Public housing provided by government authorities accounts for as little as 4%.
Those who need the most help will be hit hardest by proposed changes to property taxes
“The average Australian property investor doesn’t own dozens of rental properties. Most have borrowed to buy 1-2 properties other than their own home and it’s these ‘Ma’ and ‘Pa’ investors who are taking the risks of investing in the hope of building sustainable wealth. Without them many Australians wouldn’t have a roof over their head” says Brian Wood of Wood & Co Real Estate in Swan Hill.
“There’s a risk, however, that these investors, who provide a quarter of all housing, will walk away from property if the government reduces existing tax incentives. This will hit those who most need help in the housing market – the tenants.” he added.
A small shift could have a large impact on many
Brian’s comments are in response to the posturing of political parties spruiking changes to property taxes at the forthcoming federal election.
Much is at stake, according to the Real Estate Institute of Victoria (REIV), and a “small percentage shift in the number of available rental properties in the state would, quite clearly, impact and undermine the lives of tens of thousands of Victorians” REIV President Geoff White has been quoted as saying.
Rentals in the Loddon-Mallee region
These warnings carry even greater weight when put into the context of the availability of local housing, with the Loddon-Mallee region suffering almost a 10% decrease in the number of new rental lettings in the final three months of 2015 compared with the same period a year earlier*.
“There’s a definite shortage of rental properties in the Swan Hill region and the DHS figures at the end of 2015 only confirm and magnify this shortage. The existing property tax structures are designed to encourage private property investment and stimulate the supply of housing. Tinkering with property taxes could have the reverse effect” adds Brian.
The risk of investors walking away
The Property Council of Australia goes further: “The big risk is investors simply walk away from property – drying up supply at a time we need it most” states its chief executive Ken Morrison. “It’s not a good time to be risking major changes to such a key part of Australia’s economy.”
“If you break the axle, the train will run off the tracks” concludes Brian. “If the government takes away tax incentives, the attractiveness of property investment will be diminished and could lead to a crisis in rental property availability pushing rents beyond the reach of many tenants.”
* Department of Health & Human Services Rental Report, December quarter 2015.