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Real estate industry facing ‘the perfect storm’, REINSW boss

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Skyrocketing rent, stamp duty cuts, declining house prices and rising interest rates are all government distractions from the real issue, which is a lack of housing, says REINSW CEO Tim McKibbin. 

Largely ignored by governments for several years, demand is now urgent, he explains.

“Existing investors are leaving the market, there are insufficient builds and sharply increasing population,” he said..

“I hate to use the term but this really is ‘The Perfect Storm’.”

The solicitor, accountant and former registered tax agent will be in Newcastle on Tuesday 14 February as part of the Real Estate Institute of NSW’s (REINSW) Roadshow. 

McKibbin will join REINSW president Peter Matthews at Newcastle Exhibition and Convention Centre (NEX) in briefing industry representatives on the current real estate landscape. 

Delving into legislative changes in agency practice and procedures, consumer expectations, and agent challenges, the event is also expected to touch on what the future might hold for the Hunter property market. 

Rental Crisis 

“We monitor the vacancy rates right across Australia and the Hunter area is most certainly not exempt from the difficulties of acquiring property,” McKibbin told the Newcastle Weekly. 

“We have affordability issues, and we have supply issues. We see queues down the street of people trying to acquire a rental property and that is only going to get worse unfortunately. 

“We are seeing landlords electing to put their money in other markets. 

“They’re leaving the residential tenancy market in favour of other opportunities. 

“Some landlords are removing their property from the residential tenancy market and moving it across to the holiday and short-term rental space – we’re seeing this in Nelson Bay. 

“Commercially that can look more attractive, and you may also gain more control over your property, but it doesn’t help affordability issues and supply issues.” 

McKibbin says political talk of rent freezing, tenant pet rights, and the difficulty of reacquisition of a home from tenants, are all rhetoric driving investors out of the market. 

“The bonds data shows we’re not bringing enough residential rental properties into the market,” he says.

“Your shares portfolio doesn’t put a roof over someone’s head.”

Immigration 

Immigration is another worrying factor, McKibbin adds, with Australia set to face record numbers. 

“While immigration halted during [COVID-19] lockdowns, the applications did not, and now Australia is facing its biggest intake of immigrants in its history,” he said. 

For NSW that means large numbers heading to major centres – Sydney, Newcastle and Wollongong – for the employment opportunities they represent. 

In fact, 39% of all overseas arrivals come to NSW. 

The Chinese Government has also advised it is wanting its students to return to their studies in Australia as soon as possible, with 50,000 expected to start arriving in coming weeks. 

Housing
Australia needs 42,000 new dwellings built each year to keep up with population growth, says REINSW CEO Tim McKibbin.

Building 

“We need to be building 42,000 new dwellings per year in keeping with our population growth,” McKibbin says. 

“We’re building significantly less. 

“And the problem is if we don’t build 42,000 this year, then next year we carry a debt forward and this is what’s been going on for years.” 

Costs 

“If someone buys a million-dollar property $400,000 of that goes to taxes and charges, spread across three levels of government.

“Between GST, land tax, two sets of stamp duty, even the development process taking longer than the build…it’s all driving investment away.

“We need a conversation moving forward. Government talks affordability and then acts with tax.”

Two homes

The 2019 pandemic also saw the introduction of an increase in dual property occupancy, McKibbin adds. 

“It affected areas like the Hunter when people realised they could work from home,” he said.  

Required at a Sydney office space just two or three times per month, many opted to rent in places like Newcastle and Lake Macquarie, while deciding whether to sell or maintain their home in Sydney.

“Many were testing if it would work for them first, and it meant they were consuming two properties at once. It became we were refer to as ‘the new normal’,” he states.

While his industry is becoming, in his own words “politically popular”, McKibbin believes it’s important real estate industry representatives remain positive.

“It’s something I’m passionate about,” he says.

“These are challenges in our industry and at the moment I’m worried about the mental health of my property managers.

“I don’t think its fair that they are asked to absorb a lot of these issues just because they’re the ‘gatekeepers’.

“We’ll be discussing that and a whole lot more on Tuesday.

“There’s ample opportunity to improve the current situation.” 

REINSW CEO Tim McKibbin

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