Real Estate Buyers Fly Solo and No Relief in Sight for Real Estate Tenants

Australians are waiting longer to commit to a relationship but aren’t letting that stop them from buying property, a survey suggests. Published in the January edition of API Magazine in Australia on Page 11.

The number of Australians planning to buy real estate property on their own is on the rise, a Mortgage Choice survey of homebuyers found.

The survey found that people looking to buy their own home within two years were much more likely to buy on their own than those who bought within the past two years. Of the homebuyers-to-be, 36 per cent said they would buy on their won, compared to just 18 per cent of the recent real estate purchasers.

“These days it’s becoming more common for people to commit to another person later in life,” said Mortgage Choice national corporate affairs manager Warren O’Rourke. “But (Australians) aren’t letting that stop them from investing in the real estate property market.”

“Even low housing affordability is not a deterrent. They are empowering themselves as individuals and taking charge of a real estate property portfolio on their own,” O’Rourke said.

Mortgage Choice found that Western Australia had the highest proportion of buyers-to-be planning a solo real estate purchase (46 per cent) while New South Wales had the lowest (32 per cent).

No Relief in Sight for Real Estate Tenants: Published in Jan ’07 edition of Australian Property Investor magazine. A majority of Australians expect their rent bill to rise in the next few months and predict rents will continue to climb as occupancy rates tighten, according to a recent survey.

Website realestate.com.au surveyed 1480 Australians, with 83.4 per cent of the participants saying they planned to rent a home in the next six months. While 67.1 per cent of respondants believed rents would rise, 15.4 per cent believed they’d stay the same and 5 per cent believed they’d fall. 12.5 per cent had no answer.

It may get worse for tenants before it gets better, with 64 per cent of respondants saying occupancy rates were likely to go up in the next five years. Only 15 per cent believed they’d go down, and 21 per cent thought they’d stay the same. Of the respondants, 68 per cent were female and 32 per cent were male. The survey’s participants were spread around the country, living in New South Wales n (25.8 per cent), Victoria (27.3 per cent) South Australia (5.5 per cent), the Australian Capital Territory (1.3 per cent), Western Australia (9.4 per cent), queensland (27.7 per cent), Tasmania (1.7 per cent) and the Northern Territory (1.3 per cent).

“Given real estate rental vacancy rates are at the lowest level on record, it’s not surprising that most people believe it’s going to get even tougher to afford the rent on their home,” said realestate.com.au general manager Australia and New Zealand, Shaun Di Gregorio.

Di Gregoria offered some tips to renters in this competitive real estate renters market. “Don’t limit your search to just one area,” he suggested. “Cast the net a little wider to include surrounding neighbourhoods. “With so much competition, get your application in as soon as possible, even if you’re uncertain about the real estate property.”

“Many agents will take applications electronically and this is a really fast way to submit. Scan copies of references, identification, like your driver’s license and the application form itself into your computer and then email directly to the real estate agent.”

Don’t Blaim Real Estate Investors: Despite getting some bad press, property real estate investors aren’t to blame for low housing affordability, says analyst Michael Matusik. Published in the Australian Property Investor magazine Jan ’07 edition.

Recent reports on the housing affordability issue had wrongly place the blame at the feet of real estate investors and the negative gearing provisions that make real estate investment more attractive, Matusik said.

He said it was a myth that investors were driving house prices higher by outbidding potential first time home buyers.

“Real estate investors in residential property are in the business of supplying accommodation,” Matusik writes in a recent Snapshot report published by Matusik Property Insights.

“Orthodox economics says that a subsidy (negative gearing in this case) to suppliers (investors) – all things being equal – will result in an increase in supply and a fall in the price of the product (rental housing) supplied. A subsidy to residential real estate investors results in an increased suppy of rental accommodations, lower rents, and a reduction in the demand for, and prices of, owner-occupied housing too. Favourable tax treatment of residential real estate investors results in lower, not higher, house prices. One could argue, given the current shortage of rental accommodations across Australia, that the subsidy to residential real estate property owners is not generous enough. There should be more negative gearing, not less!

“The parable that investors elbow intending owner-residents to the back of the housing queue, hence forcing up the price of real estate housing, is nonsense. Extraordinary price growth, resulting from competition for housing, can only occur when there is a constraint on the long-term supply of dwellings.”

To back up this point, Matusik pointed out that while the real estate market for rented apartments had performed as a normal market – with rents and prices broadly rising in line with inflation – since the late 1980s, house prices had increased substantially.

He said this was because there had been few limitations on the supply of apartments across Australia over the past 20 years but the supply of land for new housing stock had been limited. Matusik said financial, policy, and social barriers were conspiring to reduce the level of home ownership among first homebuyers – not real estate investors squeezing homebuyers out of the market.

He also warned that any move to limit or remove negative gearing would see property investors in real estate shift their money to other real estate investments and rents would subsequently skyrocket.

Did you know?
28% of households in Australia’s capital cities are rented
40% could be rentals within two decades

Source: Matusik Property Insights