Investors Not to Blame

Governments have very successfully shifted the blame for today’s housing affordability challenges away from their own housing policy failures and instead pointed the finger at property investors and the real estate agents that represent them. Politicians have very effectively shifted the narrative away from supporting private property investment to supply homes to the market whilst simultaneously blaming investors for spiralling rents and house prices. This is a remarkable achievement.

Like it or not, unsophisticated private investors – ordinary Australians – supply 27 percent of all homes in the nation to tenants. Government supply about 3 percent as social housing. Yet, in this time of greatest need, with supply of rental homes at severe lows, there is not a single new housing policy that seeks to encourage the investor cohort into supplying more homes.

On the contrary; governments shun the idea of stamp duty reform, land taxes continue to rise and tenancy laws continue to swing in favour or tenants. Negative gearing and capital gains tax discounts are no longer sufficient incentives to encourage enough investors to buy. Appealing tax settings and returns in superannuation funds, commercial property and syndicated funds offer ‘mum and dad’ investors an alternative to direct residential property investment.

Recent comments made by an industry leader in NSW that suggested property investors were selling their properties because, ‘they’re tired of being labelled “greedy landlords”’, was criticised, but is absolutely true. A Queensland ‘shock-jock’, locked horns with the REIQ’s CEO recently over unaffordable rents and tenancy laws in that state saying he ‘didn’t care’ how landlords felt. Adam Bandt, leader of the Greens, after his party called for a two-year rent freeze, is on the public record as saying, ‘they’re a landlord, they can afford it,’ when questioned about the impact of a rent freeze on investors carrying rising mortgage costs.

Prior to 2014, the volume of investors buying residential homes to add to the rental pool, ran at a higher rate than those selling rented homes. Talk of changes to negative gearing tax laws from the then opposition, along with broader market factors, began to see this trend reverse. Nowadays, there are far more rental homes being sold than purchased.

In Victoria, thanks to rising land taxes and changes to tenancy laws, for every three tenanted properties sold, only one remains in the rental market. In WA, there are now 18,000 fewer tenancy bonds being held today by the Bond Administrator than in 2019. When investors are inactive in the market, it falls to government to provide the housing; something they have failed to do.

Put simply, governments – supported by the media – have been busily whacking investors, whilst simultaneously failing to provide enough rental housing for Australians as the only alternative to the private investor market. And, somehow, they’ve so far been able to get away with it.