Industry body calls for government enquiry to address housing crisis
The housing affordability crisis demands attention now, as values are on the move again, REINSW says
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A leading real estate industry body has called for a government enquiry to address ‘skyrocketing housing demand’.
CEO of the Real Estate Institute of NSW, Tim McKibbin said the contrast between the demand for housing and the available stock is already at ‘critical’ levels – and is only set to get worse.
“REINSW is calling for an immediate and expeditious Inquiry into the inhibitors of supply and then a brutal action plan involving industry and Government to implement the recommendations,” Mr McKibbin said.
“The community is sick of all the talk on this issue. It’s time for action and this means government and industry working together now.”
Homebuyers unable to find a property at their price point have remained in the rental market, where a lack of supply is putting further pressure on rental prices, which have soared 10.2 percent in the past year.
Data from PropTrack has shown rental vacancy rates were at an historic low in March this year. As rental properties become available and have been quickly leased, landlords have had the opportunity to increase rent, further impacting households’ ability to save for a deposit.
In capital cities, rents have risen 13 percent year-on-year, while in regional areas, rents have gone up by 4.5 percent.
CoreLogic reported house values are also on the move, which Mr McKibbin said put the goal of buying a home further out of reach.
“Higher house prices and rents are an unavoidable market consequence of a housing shortfall, and without more social and affordable housing, increased homelessness is a catastrophic social consequence,” he said.
“There is already evidence of prices beginning to rebound and we need to remember that the bull-run through the pandemic typically pushed median prices up between 20 percent and 30 percent, depending on the area.
“The rebound in house prices is no surprise. The lack of supply is the primary enemy of affordability.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
Philip Lowe’s comments come amid property industry concerns about pressures on mortgage holders and rising rents
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Leaders in Australia’s property industry are calling on the RBA to hit the pause button on further interest rate rises following yesterday’s announcement to raise the cash rate to 4.1 percent.
CEO of the REINSW, Tim McKibbin, said it was time to let the 12 interest rate rises since May last year take effect.
“The REINSW would like to see the RBA hit pause and allow the 12 rate rises to date work their way through the economy. Property prices have rebounded because of supply and demand. I think that will continue with the rate rise,” said Mr McKibbin.
The Real Estate Institute of Australia today released its Housing Affordability Report for the March 2023 quarter which showed that in NSW, the proportion of family income required to meet the average loan repayments has risen to 55 percent, up from 44.5 percent a year ago.
Chief economist at Ray White, Nerida Conisbee, said while this latest increase would probably not push Australia into a recession, it had major implications for the housing market and the needs of ordinary Australians.
“As more countries head into recession, at this point, it does look like the RBA’s “narrow path” will get us through while taming inflation,” she said.
“In the meantime however, it is creating a headache for renters, buyers and new housing supply that is going to take many years to resolve.
“And every interest rate rise is extending that pain.”
In a speech to guests at Morgan Stanley’s Australia Summit released today, Governor Philip Lowe addressed the RBA board’s ‘narrow path’ approach, navigating continued economic growth while pushing inflation from its current level of 6.8 percent down to a more acceptable level of 2 to 3 percent.
“It is still possible to navigate this path and our ambition is to do so,” Mr Lowe said. “But it is a narrow path and likely to be a bumpy one, with risks on both sides.”
However, he said the alternative is persistent high inflation, which would do the national economy more damage in the longer term.
“If inflation stays high for too long, it will become ingrained in people’s expectations and high inflation will then be self-perpetuating,” he said. “As the historical experiences shows, the inevitable result of this would be even higher interest rates and, at some point, a larger increase in unemployment to get rid of the ingrained inflation.
“The Board’s priority is to do what it can to avoid this.”
While acknowledging that another rate rise would adversely affect many households, Mr Lowe said it was unavoidable if inflation was to be tamed.
“It is certainly true that if the Board had not lifted interest rates as it has done, some households would have avoided, for a short period, the financial pressures that come with higher mortgage rates,” he said.
“But this short-term gain would have been at a much higher medium-term cost. If we had not tightened monetary policy, the cost of living would be higher for longer. This would hurt all Australians and the functioning of our economy and would ultimately require even higher interest rates to bring inflation back down.
“So, as difficult as it is, the rise in interest rates is necessary to bring inflation back to target in a reasonable timeframe.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
