The critical shortage of rental properties in most locations around the nation is partly the result of lending restrictions that came into force four years ago, according to the Property Investment Professionals of Australia (PIPA).
The smaller capital cities and most regional centres are struggling with significant undersupplies of rental properties, with vacancy rates often at record lows.
PIPA chairman Peter Koulizos says the restrictions on investment lending that began in March 2017 saw a drastic reduction in investor activity, which reduced the usual supply of rental stock being added to the market.
Investor activity reached a 20-year low in May 2020, according to the Australian Bureau of Statistics. “Investor activity dropped about 50% from March 2017 to May 2020 because of the lending restrictions that were applied carte blanche to investors around the nation four years ago,” he says. “The restrictions came into effect because of the strong property price growth in Sydney, but investors everywhere were also blocked from securing finance even in markets with benign market conditions at the time, such as Perth, Adelaide and Brisbane.”
The vacancy rate industry standard for a balanced rental market is 3%, with any percentage below that figure considered to reflect a market with more demand than supply, according to PIPA. Most capital cities and regional locations have vacancy rates of less than 1% at present.