Housing affordability in this country and many others is certainly a major problem. It's interesting to compare to countries like Germany where home ownership is rare and renting is the norm. In those places, I believe residential housing is often often by large institutional investors. Although the yield on domestic real estate is pretty poor compared to other asset places, I wonder if this would ever happen in Australia?
I think if it was going to happen it would have already happened. There's trillions swirling around in Australia's super funds and the people who run them have obviously decided that the returns on building rental housing aren't competitive.
The following article mentions that the taxes around build to let are "prohibitive". Unwinding those taxes might encourage more companies to invest in this stream and even though they're looking to maximise profit, it should take some heat out of house prices.
Re: Institutional investors. There is a chart in this article which shows that global investors have been overweight in Australian residential property so that could be a big factor in driving prices up. Returns are due to fall so it's likely that investors will reallocate their money and this will reduce prices. We just need to find a way to do so without destroying too much value while also helping renters buy their own homes.
Housing affordability in this country and many others is certainly a major problem. It's interesting to compare to countries like Germany where home ownership is rare and renting is the norm. In those places, I believe residential housing is often often by large institutional investors. Although the yield on domestic real estate is pretty poor compared to other asset places, I wonder if this would ever happen in Australia?
I think if it was going to happen it would have already happened. There's trillions swirling around in Australia's super funds and the people who run them have obviously decided that the returns on building rental housing aren't competitive.
The following article mentions that the taxes around build to let are "prohibitive". Unwinding those taxes might encourage more companies to invest in this stream and even though they're looking to maximise profit, it should take some heat out of house prices.
Re: Institutional investors. There is a chart in this article which shows that global investors have been overweight in Australian residential property so that could be a big factor in driving prices up. Returns are due to fall so it's likely that investors will reallocate their money and this will reduce prices. We just need to find a way to do so without destroying too much value while also helping renters buy their own homes.
https://www.afr.com/property/commercial/australia-falling-out-of-favour-with-reits-20220401-p5aa5n
From your typing fingertips to God’s ears, Glenn!