Housing Affordability
The media reports the housing affordability crisis as if it is bad news for everyone but this is not true. The fact is that the same factors leading to low housing affordability also lead to benefits for existing, or intending, residential property investors.
What are some of these factors and how do they play into the hands of investors? Firstly, there is the low rate of housing starts in Australia at the moment. Figures published by the Housing Industry Association (HIA) show that the rate of new dwellings being built is stagnant and lagging behind underlying demand which HIA estimates at 170,000 annually. In the most recent financial year the new starts were just 150,993 and this was down 0.3% on the previous year. In the month of August 2007 detached dwelling approvals were just 8,852 and unit approvals were just 3,811 - both substantially down from the level in the same month in the previous year.
Secondly, the HIA reports that rents increased on average by 1.6% Australia-wide in the September quarter. The annualised rate of increase to rents is much higher.
Thirdly, there is a decrease in the rental vacancy rate; that is, the number of vacant dwellings which are not producing a rental income to their owner. The Australian Bureau of Statistics (ABS) and the Federal Treasury report that Australia's overall rental vacancy rate has fallen to just 1.36% - the lowest level recorded since the series began in September 1969. A vacancy rate of 3.0% is generally believed to indicate a balanced situation between demand and supply in the rental market.
Finally, the HIA has reported that average house prices across Australia have soared by 11.4% in the past twelve months.
The combined effect of all these factors means that the main nagging doubt faced by new property investors should be substantially calmed. One of the big worries for investors is that they may not be able to rent the dwelling at all or that they may only receive poor rental returns. It would appear from these statistics that, despite housing affordability issues for new home buyers, there are reasons for existing home owners and prospective property investors to be confident about the future.
If you are one such investor who has also come to this conclusion through your own independent research, now may be the time to contact us to discuss your financing options. We can help you access a loan from an extensive range of lenders.