In the wake of 2020, we have the opportunity to reflect and prepare for future challenges.
Notwithstanding the upset that the response to the COVID-19 outbreaks have caused, the real estate market has remained strong. The federal government acted promptly with JobKeeper and JobSeeker programs, which helped keep jobs and businesses afloat. Likewise, the state government quickly acted to protect tenants, placing legal constraints on rental adjustments and evictions. For many, the interventions in the rental property market was welcomed. However, the ‘cookie-cutter’ approach has left a few with a sour taste in their mouths.
The rental property market gives insight into the struggles that many Australians have faced this year. Commercial tenants who suffered downturns were able to maintain staffing levels, and thus their businesses, thanks to JobKeeper and JobSeeker. However, with support scheduled to be rolled back in March, businesses are now facing fresh challenges. In this difficult operating environment, we will likely see further disruption in the commercial space. There is every possibility that many businesses will not continue as these programs are withdrawn.
With private and commercial markets being closely linked, there is no doubt that we will also see ripples in the private rental market due to these impending changed circumstances. The state government action, which helped tenants in strife, is due to finish at the end of January. The pressure is mounting for subsidies to continue as many private tenants remain in a vulnerable situation.
On the other side of the fence, property owners have also had to face many difficulties, in part due to the same programs that have kept renters afloat. They have faced rents being frozen, tenants not being able to pay rent and commercial property lying idle. In short, no-one has been immune from the challenges of 2020.
As the residential property market continues to see increasing demand and rising house prices, vulnerable Australian’s are facing a crisis. The residential market is under pressure. House prices are rising rapidly due to an increasing demand from buyers, many of them investors competing for housing stock. We now have a situation where many people can no longer afford private rental accommodation and yet the supply of adequate social housing is found wanting.
Adding to the pressure on existing housing is the recovery of tourism and the move to re-establish properties for short-stay accommodation. The year ahead will involve a lot of discussion regarding this issue, with the Hobart City Council considering using planning laws to control the number of houses that can be used as short-stay accommodation. The council will be put under pressure from advocates for both sides of the argument, on the one hand the need for long term rentals, and on the other side the need to promote tourism.
We see the need for a clear policy direction. The state and federal government must recognise the need for more housing stock and accept the responsibility to ensure all citizens are provided with adequate shelter. We must work to shift the stigma that public housing carries with it. We could look to European countries, such as Austria, for an example of how public housing could function within this country.
The government has relied on the private sector to manage public housing for them. Herein lies a big problem. The private sector is not a government housing agency. The private market is the private market, with supply and demand being its major driving force. We can encourage a range of not-for-profit enterprises to build more social housing stock, but that will take time. Every moment of delay on this issue will cause more people to fall through the cracks.
The ‘build to rent’ solution is worthy of being given some consideration. Under this strategy, private investors would invest in a trust which then builds apartments or multi-dwelling accommodation, with the property then being managed by agents nominated by the trust. However, the present tax laws make it difficult for such projects to get off the ground. And again, it will take time to iron out all of the issues before such a program makes any headway.
It is positive to see that housing construction is being encouraged in the outer suburbs of Hobart. Many contractors are saying it has never been busier. Unfortunately, the inner city has been slow to meet the various demands that comes along with a growing suburban population. Soon our roads will be clogged with traffic as the city’s infrastructure buckles under the demand of commuters. These issues emphasise that a holistic planning approach would serve us well, although these problems have a history of being put in the ‘deal with it later’ category.
While our society grapples with such matters, more and more people are being forced onto the housing queue. And this is creating significant social and economic upheaval. Despite 2020 being behind us, we will continue to shoulder many of the burdens that it brought upon us. These problems are not going away any time soon. 2021 is going to have its challenges.