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Simply put, NSW does not boast enough property for “people that are looking for a rental property,” insists chief executive officer of the Real Estate Institute of NSW (REINSW), Tim McKibbin.
Speaking on a recent episode of Secrets of the Top 100 Agents, Mr McKibbin explained that the housing market has been plagued by depleted supply for well over 12 months, inspiring not just a recent pandemic property price boom that propelled state capital Sydney’s median house price above the $1 million mark, but also dragged the state’s residential vacancy rates to unhealthy levels.
With the pandemic firmly in the national rearview mirror, he noted current low levels of supply are set to be further exacerbated by returning international migration, including the return of Chinese students earlier this year.
“As a consequence, there is insufficient supply, and the demand is continuing to grow,” he said, adding these conditions are set to push rental prices in the nation’s second most expensive market up further.
“That’s what is happening right now,” he explained, before adding that “everything else that is circulating in the market right now are simply symptoms of that problem.”
While supply-side relief is far off, especially given NSW’s requirement of 42,000 new homes to be built each year — which is currently not being met — he explained a repositioning of government rental market action is necessary to provide some semblance of immediate relief.
Instead of implementing schemes such as the ban on rent bidding, implemented at the end of last year by the Perrottet government, Mr McKibbin declared that “the first [government] inquiry should be why is there rental bidding?”
He cited an example where an agent is charging a $500 weekly rent for a property, and, with a line of hopeful tenants running down the street, someone gets to the front and offers higher than the advertised rents.
In such instances, he noted, “It’s not the agent that is conducting a rental bidding war for the property, it is consumers. They’re the people that are driving rental bidding,” he said.
“If you want to stop rent bidding, bring more property onto the market, that’s how you solve it,” he added.
Rental bidding and rental freezes, which have often been flagged as potential aids to the rental crisis, are, in Mr McKibbin’s eyes, “all designed to divert the community’s attention away from the core problem and the core failure of bringing enough property market.”
He asked whether enacting “more and more tenant-friendly laws that are driving investment away” is the “best strategy for tenants,” especially when they inspire greater investor withdrawal from the market.
“The data tells us very clearly that landlords are selling and putting their money elsewhere. The really sad irony of this is that when the landlord sells because of changes to the tenancy relationship, the real loser, the big loser, are tenants,” he said.
As landlords search for greater control over their property, Mr McKibbin noted many have started flocking to short-term rental accommodation (STRA) arrangements, where, aside from control, they can gain greater returns on their investment.
Moving forward, despite the REINSW being accused by outside parties of being the “landlords’ advocate,” Mr McKibbin insisted, “We are the advocates for the market.
“We want a vibrant market. We want tenants to have a choice in the market. We want to see landlords getting a good return on their investment.
“We want to see the rental market be something that will attract investment rather than drive it away,” he declared.
With the newly elected NSW Labor government campaigning with an agenda stocked with rental-related policies and promises, Mr McKibbin believes collaboration between the government, the REINSW, and all other relevant stakeholders is pertinently necessary for relieving some of the current market stressors.
A recent data drive by the REINSW explored why the state’s investors have sold or are considering the sale of their property which he hopes will influence policymaking moving forward.
He insisted these actions will benefit all rental stakeholders, not just landlords, by increasing fairness within the market and inspiring investors to maintain their stake in the state’s property market.
“I have to make the point here; the big loser here will be tenants. For every landlord that sells, it’s one less property in the market,” he concluded.
To listen to the full conversation, click here.
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