Property Point

The rental crisis is real in Australia and in Queensland and Mackay is no exception to the rest of the country.

Anyone who is renting or looking for a rental property will be aware of the challenges and costs involved.

It is a perfect storm for renters because landlords are facing increased costs because of interest rate rises … their mortgage payments have gone up and they are looking to increase rents to help cover the extra expense.

This coincides with a lack of available rental properties so the old story of economics, demand and supply, comes into play and landlords are able to increase rents and take advantage of the lack of supply.

In Mackay, and in many parts of the country, rental vacancies are around the 1 per cent mark.

Meanwhile the Queensland Government is wanting to be seen to do something about the crisis in this state.

The Government recently announced a plan to limit rent increases to once a year. While that might provide some certainty for renters, it is not going to stop the increases nor deal with the lack of supply; in fact it could contribute to a dwindling of supply and make things worse.

Demand and supply is the thing and governments need to create an environment where new residential houses and apartments are built.

Michael Matusik, the excellent real estate commentator, recently addressed the issue in his regular comment piece the Matusik Missive.

He said: “Rising costs, labour shortages alongside fixed price contacts has stuffed up a lot of building businesses, with many facing the wall.

“Some major construction firms are now thinking of pulling out of the residential sector altogether.

“Working for the practice isn’t fun for anyone and even when there is a profit it is increasingly negligible making it hardly worth the risk.

“Yet all states and territories – with the exception of Victoria and the ACT – aren’t building enough new dwellings to cater for underlying demand. See charts 3 and 4.

“Over the past year we approved some 187,000 new dwellings but we needed 220,000 or 33,000 more.”

When the Greens and state governments talk about limiting rents we have to remember that the socialist approach has a history of failure in pretty much all walks of life and what governments should be doing is creating an environment that encourages a greater supply of rental properties.

Let demand and supply do its job and get the balance right between a decent return for investors and more affordable rental costs for tenants.

Post-Covid immigration is about to crank up so things are not going to get better.

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