The Australian property market has defied dire predictions
A spate of latest data shows that despite the ongoing pandemic and slower economy, Australia’s housing prices are continuing to soar in metropolitan cities such as Sydney, Melbourne, Adelaide and Brisbane, along with ‘hot spot’ regional areas with affordable housing and excellent accessibility to services like the NBN and national rail links.
It’s a stunning turnaround from forecasts made in the early days of the COVID-19 pandemic some 10 months ago, when it was thought by some analysts that property prices could fall anywhere from 10 per cent to 30 per cent. The figures come off the back of a recent Domain House Price Report that revealed the national median house prices rose 4.1 per cent in the December quarter, the steepest quarterly jump in four years.
Yet the impact of strained affordability on very low to moderate income earners is really hitting hard. Especially during the past year when workers have been stood down due to Coronavirus, affecting employment levels and greater economy.
Addressing a hidden housing crisis
According to Streetsmart Australia research, every night across Australia, more than 105,000 people are homeless. That is 1 in every 200 Australians who do not have a safe and secure place to call home. Rising rental costs and lack of affordable housing in cities where many people base themselves for greater access to health services, employment opportunities, education and community support, has a role to play.
While much of the public commentary is focused on homeownership, rising prices have a flow-on effect to rental prices. This is pushing many families, older people, single parents, and individuals to the brink.
Recent statistics from National Shelter show that many low-income households are paying up to 70% of their income on rent alone, leaving little for basic necessities like food, electricity and dental care. This heightened vulnerability increases the risk of homelessness.
While many people associate being homeless with living on the street, and while this is the sad reality for many people, only six per cent of people experiencing homelessness sleep rough. The other 94 per cent are couch surfing, sleeping on friends’ or relatives’ sofas, living in cars, sleeping in emergency accommodations, or living in other inadequate arrangements.
Of the 105,000 Australians experiencing homelessness, 42 per cent of these people are under the age of 24, and 44 per cent are women.
Why BTR can help stabilise a life
Build-to-Rent (BTR) developments are part of a longer-term solution for younger generations and anyone that needs stable housing in a big city.
The stable rental housing costs for tenants (and NDIS tenant suitable accommodation integrated into each apartment complex) won’t alleviate all the issues underpinning the nation’s homelessness, but it is making a difference. There were less than 10% tenant turnover change at Vellum and Urban Property Group’s Highland building in Penrith in Western Sydney since the initial pandemic lockdown in March 2020
This is by deliberate design, by carefully integrating into every project a focus on affordable, quality buildings that also meet ESG goals that can reduce living costs for tenants – such as recycled water, solar panels and community vegetable gardens – tenants’ desire to rent long term remains high.
With a focus on above-average rental returns for investors and a higher standard of well-priced accommodation, the BTR model is hopefully going to grow from strength to strength, for investors and tenants alike.