Floods aggravate rental crisis – Smart Property Investment

Pete Wargent, co-founder of BuyersBuyers, announced that flooding events in New South Wales and Queensland have increased pressure in areas such as the Northern Rivers region of New South Wales, where housing inventory is already low, as well as in Brisbane’s family-friendly housing market.

“Rental markets were already in a tightening cycle,” Wargent conceded.

“All eight capitals were already experiencing a downward trend in vacancy rates with the honorable exception of Darwin, while many regional markets are, practically speaking, at capacity.”

He noted that the national vacancy rate has fallen to “about 1% for the first time in more than a decade and a half”, with further declines expected as international borders reopen and employment levels rise. historic highs of over 13 million this year.

Focusing on the Queensland capital, Mr Wargent said: “Brisbane saw around 15,000 homes flooded during this event, potentially rendering thousands of homes uninhabitable, and vacancy rates there were already at their lowest for a decade.”

Fewer builds, fewer approvals and higher costs for materials, labor and financing add a lot of friction to the rental market, the co-founder added.

“The problem when you have a disaster with widespread impact, like a two-state flood, is that it usually adds additional pressure on the cost of labor and materials,” Wargent explained.

Home construction and renovation projects have been boosted by the HomeBuilder stimulus package, he acknowledged, but construction activity is slowing due to falling approvals, particularly in the unit market.

“There is considerably less demand from overseas investors, which means approvals for attached housing, particularly for high-rise unit developments, have not gained as much traction this cycle. market,” said Doron Peleg, Managing Director of BuyersBuyers.

Insolvencies in the construction sector are already in the headlines – and Mr Peleg said that “the recent announcement that Probuild could go into administration seems like a canary in the coal mine for the construction sector. construction”.

“Profit margins are typically thin for developers and overlapping supply shocks have put a lot of pressure on the cost of materials and labor, How did he.

While construction bankruptcies have been particularly low over the past two years, Peleg said recent events have led to more insolvencies as evidenced by rising costs leading to unfinished projects.

“Talk of potential interest rate hikes will naturally tip the balance between buying and renting for many marginal households, and with landlords less willing to invest, the result is likely to be a rental crisis and double-digit rental price growth,” Wargent concluded.

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To rent

Rent refers to the payment made periodically by a tenant to a landlord for the use and occupancy of a property.

About the Author

Noemi Pamintuan-jara

Noemi is a journalist for Smart Property Investment and Real Estate Business. She has extensive experience writing for the business, health and education sectors. Noemi is a contributing author of a summary published by the American Public Health Association and Best Practices in Emergency Pedagogical Methods in Germany. She shares copyright ownership of an instructional video for pharmacists when communicating with deaf patients. She attended De La Salle University where she obtained a double degree in psychology and marketing… Read more

Floods aggravate the rental crisis




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Last update: March 15, 2022

Posted: March 16, 2022