A housing affordability crisis could see thousands of Queenslanders displaced as an investor incentive scheme expires.

The National Rental Affordability Scheme, which has run for 10 years, was set up to give investors incentive to keep their properties affordable.

But as the offer expires, there’s potential for more than 9500 properties to see a rent hike.

Everybody’s Home spokesperson Kate Colvin told Sofie Formica rent was already ‘sky high’ in Brisbane, rising 14 per cent in one year.

“What perhaps wasn’t known at the time was we were going to have COVID crisis, which would send even more people north to sunny Queensland.

“The rental crisis in Queensland is even worse than before and having these incentives expiring on top of that situation is just going to make it really impossible.”

She says there needs to be more support to alleviate the issue at a Commonwealth level.

“The Queensland government are already putting a big investment into affordable housing.

“We need the federal government to step up and make their contribution.”

Home values are still rising at their fastest pace in more than 30 years despite lockdowns in Australia’s two biggest cities and the foot coming off the pedal over the past six months.

They jumped another 1.5 per cent in September, bringing the total increase for the first nine months of the year to 17.6 per cent, according to Corelogic.

Nationally, home values have soared by 20.3 per cent over the past 12 months to a median of $676,848, which is up $8334 from last month.

The annual growth rate is now tracking at its fastest pace since the year ending June 1989.

But while the market conditions remain positive, the monthly growth rate is continuing to lose steam and ease back from its peak of 2.8 per cent in March.

Corelogic research director Tim Lawless said worsening affordability—with increasingly higher barriers to entry for non-homeowners and fewer government incentives—was slowly putting the brakes on growth rates.

“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers,” he

said.

Lawless said a prime example was Sydney, where the median house value at just over $1.3 million now means the typical buyer needs around $262,300 for a 20 per cent deposit.

“The slowdown in first home buyers can be seen in the lending data, where the number of owner-occupier first home buyer loans has fallen by -20.5 per cent between January and July,” he said.

“Over the same period, the number of first home buyers taking out an investment housing loan has increased, albeit from a low base, by 45%, suggesting more first home buyers are choosing to ‘rent vest’ as a way of getting their foot in the door.”

Corlelogic’s research indicates the monthly change in house values remains positive across all capital cities with Hobart (2.3 per cent) and Canberra (2 per cent) notching up the largest growth, while Darwin (0.1 per cent) and Perth (0.3 per cent) recorded the softest growth.

Generally, house values are still rising faster than unit values with the exception of Hobart and Darwin, where unit values have risen 5.4 percentage points and 4.8 percentage points more than house values, respectively, during the past 12 months.

Across regional Australia, however, unit values rose faster than house values in the September quarter.

“This is probably a reflection of stronger demand for downsizing options and holiday homes in popular coastal markets,” Lawless said.

AMP Capital chief economist Shane Oliver said ultra-low mortgage rates, an ongoing relatively low level of homes for sale along with a resumption of economic and jobs market recovery once lockdowns end, pointed to further home price increases ahead, albeit at a slowing rate.

“A surge in listings once lockdowns end could act as a bit of a dampener on price growth,” he said. “But this looks to be more of an issue in Melbourne where listings have fallen sharply in recent weeks and where economic uncertainty is greater, but less so in Sydney where listings have already been increasing.”

Demand is outpacing supply for public housing across Australia, new figures show, as soaring property prices and a tightening rental market across regional Australia has led to what some experts are calling a “crisis.” 

Newly-released data from the Queensland government shows that thousands of the state’s residents are currently stuck in a public housing bottleneck. 

It found that 2,000 households were added to the social housing register in Queensland last financial year, with 27,933 applications currently out for public housing. 

“Given the impact of COVID-19 on the housing market right across the state, it is not unexpected to see an increase in people seeking support through the Housing Register,” Queensland’s Housing Minister Leeanne Enoch told the ABC. 

The Queensland Council of Social Service said the social housing register figures list had increased by 78% over the past five years. 

This follows data released in June that showed there were more than 50,000 households across NSW already on the waitlist for social housing. 

Community Housing Industry Association (CHIA) NSW cited internal modelling that showed NSW has a shortage of at least 70,000 social housing dwellings. 

“There is simply no strategy for addressing this critical shortfall,” the CHIA said in a media release. 

“States around Australia have begun to respond to the housing crisis. NSW has the biggest waiting list of all.” 

Similarly, figures from the NSW Department of Planning and Environment show an increasing squeeze on housing supply, which it said requires government action. 

Data released in late September showed that 29,785 new homes were built in Sydney over the 2020-21 financial year, lower than the 30,190 homes completed over the 2015-16 financial year, and around 8% lower than the 32,464 homes completed over the 2019-20 financial year.

Luke Achterstraat, executive director of the NSW Property Council said the recent figures reflected the council’s concerns about housing affordability and supply.

“The NSW Intergenerational Report states that we need 42,000 homes built per year. With an existing undersupply of almost 50,000 homes across the state, to fall behind a further 12,000-plus homes this year puts us in dire straits and highlights the need for positive solutions,” Achterstraat said.

“Without immediate action, aspiring homeowners and renters will suffer ongoing and increasing housing affordability challenges.”

Rental stress is pushing demand for public housing 

Leo Patterson Ross, chief executive of the Tenant’s Union of NSW told Business Insider Australia it had witnessed skyrocketing rental stress since the start of the pandemic.

The Tenant’s Union was increasingly hearing it was leading members to make difficult decisions in order to be able to stay in their property. 

When you’re paying too much rent, that means “you’ve sacrificed somewhere else,” Ross said.

Migration away from cities in record numbers as a reaction to pandemic lockdowns had exacerbated existing trends, he said.

Capital cities lost 11,800 people to internal migration, the largest quarterly net loss on record, in the first three months of 2021, according to recently released ABS figures.

“We’ve really seen the most aggressive increases [in rent] up and down the coast,” Ross said, referring to NSW and Queensland. 

Ross said these movers, who were still earning the same income they were when they were in capital cities, were inadvertently driving up rent because of the way Australia’s rental market operates.

“The way that we have structured our rental system is that it’s a competition,” Ross said. “It means that [landlords] will increase the price to match the demand and to match the people trying to find a home.”

He said as a result of movers encroaching on regional towns, people unable to meet increasing rents were “being evicted to make way for people who are coming in from out of town.”

Ross said one way to redress this imbalance was for the government to build a supply of affordable housing to create stable “availability and pricing” outside of the current market. 

“Because there’s no genuine competition for landlords, particularly [on] the low end of the private market, there’s very little competition that would change their behaviour and make them work to keep their tenants,” Ross said. 

“A big supply of genuinely affordable housing would provide that competition.”

In a statement, Assistant Treasurer and Minister for Housing, Homelessness and Social and Community Housing Michael Sukkar said the federal government’s National Housing Financing and Investment Corporation (NHFIC) was making significant inroads to support social and affordable housing.

He said it had supported more than 13,000 social and affordable properties in three years.

“The government is also delivering across the housing spectrum, with around $9 billion expected to be spent in the upcoming financial year on housing and homelessness,” Sukkar said.

However data from Homelessness Australia shows the federal government has cut investment in social housing and homelessness by $1 billion over the past decade.

During this period Australian rental prices jumped 30% and house prices rose by 50%.

Senator Mehreen Faruqi, Greens spokesperson for Housing, told Business Insider Australia that there was “enormous urgency” to invest in public and community housing.

“We are in a housing crisis, plain and simple. Our society is growing more inequitable as access to permanent housing and home ownership has become completely out of reach for so many.”

“One million new homes will be needed – right across the country – to clear public housing waiting lists and ensure universal housing.”

Wealth inequality rising due to Australian market

Brendan Coates, economic policy program director at Grattan Institute, told Business Insider Australia the overarching story over the past two years has been a growing divide between haves and have-nots driven by the Australian property and rental markets. 

“Wealth inequality is widening, basically because wealth is rapidly accelerating,” Coates said, driven by investment in property. 

He said he expects the effects to continue emerging out of the pandemic, and agreed that government intervention was necessary to walk back some of the impacts. 

“If housing is unaffordable for low income earners, in particular, that would mean putting more money in their pockets, so they can afford to compete in the housing market, or so they can afford to secure a stable rental,” he said, along with policies that raise the rate of rental assistance.

Coates said one of the more impactful ways to counter this, along with more effective taxation of savings and accumulated wealth, was through the housing market. 

“A big part of the solution is fixing housing – that would do a lot to reduce the effects of slowly increasing inequality.”

Australia is closing in on the symbolic milestone of a $1 million median property price, as Austalian Bureau of Statistics (ABS) data revealed that the early stages of Sydney’s lockdown had ‘no discernible effect’ on price growth.

The median house price across the country rose by another $50,000, topping out at $825,700 for the month of June.

Collectively, the 6.7% price growth seen across Australia was the strongest since the ABS began its Residential Property Price Index in Q3 2003.

The lockdowns that began in Sydney at the end of the month had a negligible effect on price growth, which grew by 8.1% quarter to quarter and a staggering 19.3% on the same period last year.

Sydney median house prices grew faster than the national average again, adding $81,000 in value for a median price of $1, 093,100.

Canberra posted ever stronger numbers, with their prices up 8.2% Q2Q and 19.1% compared to last year. The ACT also surpassed Victoria on the median house price list, reclaiming second place for the first time since March 2015 with a median price of $891,700.

Other areas were slightly slower, but still up across the board. The national weighted average price growth, according to the ABS, was 6.7%, with Melbourne (6.1%), Brisbane (5.7%) and Hobart (6.3%) the next best.

Darwin (4.6%) and Perth (4.8%) lagged, but were still comfortably up.

“The continued growth in property prices was occurring at a time of record low interest rates,” said Michelle Marquardt, head of prices statistics at the ABS.

“Persistently low levels of stock on the market were being met with strong demand and properties transacting at an increasingly rapid rate”. 

“With the exception of Hobart and Darwin, capital cities continued to see house price rises outpace those of attached dwellings such as apartments and units, with price growth for both property types being driven by the upper segments of the market.”

Australian homes are increasing $1990 per week on average this year, despite the housing market starting to lose steam.

Home values jumped another 1.5 per cent in August, bringing the total increase for the first eight months of the year to 18.4 per cent, according to Corelogic.

The increase in prices for 2021 equates to around $100,000 per home, however, in some locations, including Sydney’s northern beaches, the value jumped five times faster.

While the growth rate was still well above the average in August, it was the lowest monthly rise since January, showing the market was moderating after reaching its peak in March.

The last time home values increased this fast was in the year ending 1989, where appreciation hit 31 per cent.

CoreLogic research director Tim Lawless said the slowing rate of growth probably has more to do with worsening affordability constraints than ongoing lockdowns.

“Housing prices have risen almost 11 times faster than wages growth over the past year, creating a more significant barrier to entry for those who don’t yet own a home,” Lawless said.

“Lockdowns are having a clear impact on consumer sentiment, however to date the restrictions have resulted in falling advertised listings and, to a lesser extent, fewer home sales, with less impact on price growth momentum.

“It’s likely the ongoing shortage of properties available for purchase is central to the upwards pressure on housing values.”

Huge price growth has made living in some of Australia’s regional cities unobtainable for people renting and earning modest incomes.

The Corelogic hedonic home value index also showed the growth-gap between houses and units was starting to shrink.

Lawless said the convergence of growth in house values and unit values could be another demonstration of affordability becoming more challenging.

“The narrowing gap between house and unit value growth is most noticeable in Australia’s most expensive city, Sydney, where the monthly growth rate for houses was 2 percentage points higher than units in March,” he said.

“That ‘gap’ has now reduced to 0.6 percentage points in August. Based on median values, Sydney units cost almost $470,000 less than a house. At the same time, the growth gap between houses and units in Melbourne and Brisbane has widened.”

Corelogic said Perth and WA had not been included in this index while it investigates a divergence in results.

More jobs, increased affordable housing, a vibrant waterfront, improved transport network and green spaces for koalas are some of the key objectives in a future plan for Port Macquarie.

Minister for Planning and Public Spaces Rob Stokes released the final Port Macquarie Regional City Action Plan which will guide and shape the coastal city’s growth until 2036.

“We know that housing affordability is a key issue affecting our regional cities, which is why we’ve included actions to ensure a steady supply and mix of homes to cater for future population growth,” Mr Stokes said.

“Over the next 15 years, an additional 11,600 people are expected to call Port Macquarie home, requiring more than 7,450 homes.

“The plan will also help the council map out existing koala corridors as part of a local Koala Recovery Strategy. This will lead to the provision of more habitat and vegetation, and public space for the community to enjoy.”

Member for Port Macquarie, Leslie Williams said the final plan leverages the city’s position along the Pacific and Oxley highways to attract investment, encourage tourism and boost jobs.

“The Action Plan will strengthen initiatives, such as 550 new jobs for the Airport Business Park expansion and the creation of a Health and Education Precinct supported by better transport links,” Mrs Williams said.

“Work is already underway to improve connections with the Hastings River and beach foreshore, while our parks, public spaces and waterfront will be upgraded to create a greener, greater place to live.

“I’m delighted to see the plan is now finalised and we can get on with delivering a sustainable vision for the region.”

Port Macquarie-Hastings Mayor Peta Pinson said the final plan responds directly to community feedback.

“The community made it loud and clear that protection of the natural environment, overdevelopment and transport issues were main concerns that need addressing,” Cr Pinson said.

“To drive a sustainable future, we’re selecting trees and shrubs that not only cool down built-up areas but provide habitat and food sources for native wildlife.

“Council will continue to review its planning rules to ensure the size and scale of new building developments stay consistent and compatible with their surroundings.”

• Commentators believe a return of foreign investment could help buoy Australian property prices further.
• Despite a 12 month resurgence, Sydney, Brisbane, Perth and Melbourne have experienced ‘middle of the pack’ growth compared to other global cities.
• As borders reopen and international students return, many foreign investors may be looking to buy quickly.
• Visit Business Insider Australia’s homepage for more stories.

Australian property prices are already running hot, but the return of foreign investment could pour fuel on the fire.

New analysis from Asian real estate platform Juwai IQI shows that while some capital cities have experienced double-digit price growth on the back of record stimulus, their experience has been ‘mild’ in comparison to overseas.

“In Australia, owners have benefitted from significant increases in value. The higher prices make it harder on buyers, but they need only look at Los Angeles and Montreal to see that things could have been worse. In those two cities, prices surged at about triple the rate as in Sydney,” Juwai IQI chair Georg Chmiel told Business Insider Australia.

Sydney prices rose by 12%, or $140,000, over the 12 months to March. It sees median prices in the Harbour City hit more than $1.3 million according to Domain.

The boom has been partly attributed to the combination of easy money, economic support and a largely contained COVID-19 outbreak, and has led to affordability concerns for buyers who simply can’t get a look in.

But looking globally, Sydney pales in comparison to the 30%-plus growth experienced in Montreal, Los Angeles, Auckland and Toronto over the same period.

In New Zealand, it has been enough for the nation’s central bank to unleash a world-leading response, introducing lending restrictions during the pandemic in an attempt to arrest runaway property prices.

Australia’s largest cities are comparatively closer to the ‘middle of the pack’, according to Chmiel, with Perth, Brisbane, and Melbourne all growing 9.7%, 8.2%, and 6.1% respectively.

“Australia has an appealing story of strong but relatively measured price growth. It’s doing much better than global competitors such as London or Tokyo, where prices fell by 6% and 7% respectively,” he said.  

Yet, they have done so during a period where immigration has stalled and borders have remained largely closed.

At the same time that Melbourne, Sydney and Brisbane rank among the top 10 most popular cities with Chinese investors, it raises the potential of Australia’s boom to continue as the country eventually exits lockdown.

According to Juwai IQI analysts, pent-up demand, the strength of the market, and the return of students and regular transaction levels will all push Chinese investment to recover.

“The Australian market is already strong despite the lack of migration. Further upward price pressure will likely result as inbound migration resumes. That rapid price growth attracts buyers eager for a safe investment and afraid of missing out on an opportunity,” they wrote in a new global report.

“Many buyers have not purchased during the pandemic, and some will make those transactions in relatively short order when borders reopen.”

However, there are also reasons to believe the impact of foreign investors will be muted. Two years of lost migration, the exodus of tenants from inner city apartments and bumper construction levels are helping create slack in certain market segments.

Throw in concerns over the sustainability of double-digit price growth and a possible lending intervention speculated to come in the next few months, and there are some strong countervailing factors.

“Our Australian forecast for 2022 is for price growth to continue at more moderate rates,” Chmiel said.

“The same factors that have been supporting demand over the past year and a half are still prevalent, most notably cheap mortgages and a fear of missing out. On the other hand, an increase in supply and buyer fatigue will likely reduce the rate at which prices climb from the past year’s highs.”

Australia’s official cash rate will remain on hold at the historically low level of 0.10 per cent, the nation’s central bank has decided.This afternoon the Reserve Bank of Australia (RBA) chose to keep interest rates on hold at the current level as the country battles through the economic impact of extended COVID-19 lockdowns in several states.The decision to hold rates comes as the nation’s property market continues to make an unheralded recovery – so much so that certain regions are experiencing house prices rising at their fastest rate in 33 years.

Access to cheap credit, a delay in housing stock and the cash-hoarding nature of a year in and out of lockdown has seen many Australians decide now is the most opportune time to enter the market.During his monetary statement RBA Governor Philip Lowe said the bank was keeping a close eye on the trajectory of Australia’s property market.”Housing markets have continued to strengthen, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers,” Mr Lowe said.

Access to cheap credit, a delay in housing stock and the cash-hoarding nature of a year in and out of lockdown has seen many Australians decide now is the most opportune time to enter the market.During his monetary statement RBA Governor Philip Lowe said the bank was keeping a close eye on the trajectory of Australia’s property market.”Housing markets have continued to strengthen, with prices rising in all major markets. Housing credit growth has picked up, with strong demand from owner-occupiers, including first-home buyers,” Mr Lowe said.

“There has also been increased borrowing by investors.”Given the environment of rising housing prices and low interest rates, the Bank is monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.”

Shane Oliver, Chief Economist at AMP Capital, said the targets set by the RBA in order to raise interest rates are still years away.”The RBA is still a long way from meeting its conditions for a rate hike – namely inflation sustainably back in the 2–3 per cent target range which will require full employment and wages growth sustainably above 3 per cent,” Dr Oliver said.”And the latest coronavirus outbreaks and lockdowns risk delaying progress towards its goals.”

Many experts believe that Sydney’s current lockdown will momentarily impact house prices, but broad-based gains are only on the horizon.”With people in Sydney still unable to leave their homes, look for house price growth to slow in the coming weeks,” said Graham Cooke, head of consumer research at Finder.”This will come as good news to first-time buyers, who have seen the entry point of the market accelerating away from them in the last few months.”

Finder analysis of RBA data shows that in the first five months of 2021, a total of $97 billion was borrowed to fund the purchase of a house.Over the same period in 2018 – well before the COVID-19 pandemic and when interest rates sat at 1.5 per cent – that same figure was 50 per cent less at $62 billion.