HIA Media Release "Sydney Faces Rent Crisis"

12 October 2005

SYDNEY FACES RENT CRISIS

Sydney councils have been urged to speed up approvals for new apartments
as Sydney is caught in the grip of a looming rental crisis.

New research by Australia’s Peak Building Industry Group, HIA, reveals that
within the next 18 months, Sydney will quite literally run out of vacant rental
stock.

HIA’s NSW Executive Director Wayne Gersbach said that with Sydney rents
already increasing faster than inflation, urgent and immediate action must be
taken to get apartment and medium density projects into the construction
pipeline rather than being locked up in councils at the approval stage.

“While the merry-go-round of arguments relating to planning, zoning, and
sustainability continue, the unstoppable force of housing demand will further
drive up rents and squeeze modest and low income earners,” Mr Gersbach
said.

“Sydney’s supply of rental dwellings increased by only 14,500 in 2004/05,
down 13 per cent on the previous year and sending the rental vacancy rate
plunging from 3.6 to 2.5 per cent,” he added.

“With rental investment lending in NSW still down some 40 per cent on 2 years
ago, and with 14 consecutive months of sub-2000 new unit approvals, it is hard
to see us adding more than 10,000 new properties to the rental stock over the
next year.”

At this rate, the Sydney rental vacancy rate will plunge to zero by Christmas
next year.”

“Clearly this pressure will drive up rents, affecting savings and consumer
spending at a time when the NSW economy is already spluttering. More
importantly however is the negative impact it will have on housing affordability,
as those rental households who aspire to home ownership see their savings
eroded,” Mr Gersbach said.

“With an estimated 4,200 flats, units and apartments stuck in Sydney local
councils at present, some of which have been waiting final approval for over
two years, urgent and immediate action must be taken to not only get them
signed off, but to minimise the additional conditions and sustainability
requirements that typically add tens of thousands of dollars to the final price of
each unit.”

Website: http://economics.hia.asn.au


Bring it on!

cheers
ani

 

With you on this one Ani
An increase in rent just might make up for all the other costs that have inflated over the past years.

 

Hi Guys,

I've been having small increases in my rentals over the past year in Melbourne, too! Yay

Cheers, Medine

 

******************************************
Dear Ani,

1. Supply and demand of rental properties is one factor. The other major factor we need to consider is housing affordability.

2. If supply is in such acute shortage, we can all naturally expect the rents and housing price to shoot up into the roof, other things being equal. However, it is not actually happening in Sydney yet, isn't it. Why?

3. Have you also consider the impact of the Govt's deliberate policy when Peter Costello has openly been encouraging the young couples in Sydney to start considering starting their first home in the other Australian States as the present housing price in Sydney is likely to remain "un-affordable" for them for a forseeable period of time. This is despite the recent removal of the vendor exit tax by the NSW State Govt. This will remove the effective demand and pressure for rental properties in Sydney to a certain extent, isn't it?

4. So, as far as I can infer indirectly, the Australian Govt has no immediate intentions to let the Sydney property market rise further. Thus, the present continuing weak property market sentiments there despite the recent removal of the Vendor Exit Tax. So, when will the Sydney property market recovers? Nobody knows for sure.

5. For your kind update and due considerations, please.

6. What do you and other members say?

7. Looking forward to hearing and learning from each of you, please.

8. Thank you.

regards,
Kenneth KOH