By Tim McKibbin, Chief Executive, REINSW | 14-12-2022 | Development
Silverhall Comment – Silverhall has experienced these undersupply events in certain property markets many times in our 20 plus years of operations. Right now, buyer’s uncertainties are heightened by rising interest rates. What can’t be denied is a shortage of properties in markets and this shortage, is only going to significantly increase in the short term.
Interest rates, climate change, and the rental crisis are major real estate issues but housing supply is at the core of the property market's shortcomings.
What the market will crave in 2023 is certainty, and this will require the Reserve Bank of Australia to take the time to fully understand what the indicators are telling us before resuming any pre-determined path.
It’s uncertainty that is keeping many investors quiet. On the surface, the fundamentals would suggest investors should be active. There’s no price heat and most agents agree we’re either at or near the bottom of the property price cycle. Rental vacancy rates are extremely low and, consequently, rents are high.
But other factors are at play.
Bashing landlords not helping housing supply
Uncertainty on interest rates, and how the potential for further increases might impact repayments, is tempering investor activity. The NSW Government’s insistence on blaming the rental crisis on landlords and real estate agents is not helping.
It’s a dishonest way of seeking to pull the wool over the eyes of the public.
The rental crisis is the result of a huge undersupply of rental accommodation. With forced fanfare, the NSW Government announced in December that it will apparently provide an extra 70,000 new homes across NSW under a new program.
Unsurprisingly, the details are light and predictably, the announcement comes just before an election. But it is an acknowledgment from Government that the problem is of its own doing and is its to solve.
When demand outweighs supply to such an alarming extent, price rises will occur. When you consider the spike in mortgage repayments investors must contend with as interest rates rise, the scenario becomes even more self-evident.
Government’s inability to solve the supply problem will ensure it gets worse before it gets better. Over the last 12 months, the NSW population has grown by more than 100,000 people while the number of rental properties has declined by 50,000.
https://www.apimagazine.com.au/news/article/housing-supply-looms-as-2023s-biggest-property-hurdle?ce_code=lOSeEunb2kiMXJ2NbHWSRroeJwlUdyGa&utm_source=api+newsletter&utm_medium=email&utm_campaign=api+newsletter&utm_content=2022-12-15