Australia’s rental crisis is set to worsen, with the head of the federal government’s housing agency warning the housing shortfall could tighten more than expected at the start of the year, as interest rate hikes curb new housing supply and a pickup in overseas migration boosts demand.
National Housing Finance and Investment Corporation chief executive Nathan Dal Bon said on Monday borrowing costs that had risen faster than expected at the start of the year would reduce construction and curb the agency’s February prediction of 550,000 new homes over three years.
Mr Dal Bon, whose agency will be renamed Housing Australia and take the national lead in increasing housing supply and improving affordability under federal government plans, also said renewed immigration would boost the number of single-person households faster than expected.
“With supply expected to come off earlier than anticipated, coupled with stronger population growth, we could see a larger supply gap emerge over the next few years,” Mr Dal Bon told a Customer Owned Banking Association audience.
It’s a grim prediction for an already-difficult situation. Nationwide rental listings that have already slumped to record lows – prompted in part by more landlords returning their properties to the high-yielding short-stay market – are sending rents surging at the same time as the pipeline of new apartments is shrinking.
Mr Dal Bon also revealed new numbers – to be detailed in NHFIC’s Home Guarantee Scheme Trends & Insights Report 2021-22 next month – into the Home Guarantee Scheme, under which the federal government guarantees 15 per cent (three-quarters) of a 20 per cent deposit to qualifying first home buyers or 18 per cent to qualifying single parents.
First home buyers in Queensland and WA took up more places on the federal government’s first home guarantee scheme – renamed since its start in October 2020 as the First Home Loan Deposit Scheme – than their counterparts in any other state last year.
NSW and Victoria – where higher-priced properties reduce the number of homes that can be acquired under the scheme’s threshold prices – accounted for fewer guarantees under the scheme than their populations would imply, as did SA, Tasmania, ACT and NT.
The scheme is supporting more first home buyers. Over the year to June it helped the purchase of one in seven first home buyers, up from one in 10 such buyers a year earlier.
It is also helping more lower-income key workers, such as teachers, nurses and social workers. The proportion of guarantees to this category of first home buyers rose to 27 per cent in the year to June from 23 per cent a year earlier and 18 per cent in the scheme’s first year, 2020.
“Demand for the Home Guarantee Scheme has remained solid although there have been some changes in the overall take-up behaviour with some softening in NSW and Victoria being offset by growth in Queensland and WA,” Mr Dal Bon told The Australian Financial Review.
“The Regional First Home Buyer Guarantee, which starts on Saturday and the upcoming Help to Buy Program will also provide support for the market.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/rising-rates-immigration-will-tighten-rental-market-further-20220926-p5bl2e