8 Nov 2011
The Real Estate Institute of Western Australia has welcomed some of the suggestions from the Committee for Perth to address housing affordability for essential workers on low incomes.
While REIWA has rejected the notion of rent caps on private accommodation it has endorsed other suggestions, including incentives for 'empty nesters' to downsize.
REIWA's Chief Executive, Anne Arnold, said rent caps simply didn't work because they were a disincentive for much needed investors. Introducing uncertainty to the residential investment market would be counter-productive.
"Eighty per cent of rented housing is provided by private investors and unless the return on their investment is worthwhile, they simply won't do it. The State government does not have the funds or capacity to provide this vast amount of rental stock so incentives to property owners are essential in order to cater to the housing needs in the community," Mrs Arnold said.
Current gross rental yields for investors in Perth were around 4 to 5 per cent, at a time when the option of simply putting money in the bank achieved a higher return at around 5.5 per cent.
"Good housing policy must ensure that private owners are attracted to the housing market to nourish the supply of affordable rental stock, and the market in turn should set the rent rate in accordance with supply and demand," Mrs Arnold said.
"There are much more effective ways to provide affordable housing, such as helping older homeowners to downsize and giving local government stronger mandates and encouragement to provide for higher density living in their municipalities.
"There are many baby-boomers sitting in big empty homes on large suburban blocks looking to downsize to a dwelling that is more appropriate and manageable, but the stamp duty impost of purchasing a new home can be prohibitive and which deters them from moving.
"This is locking up many suburban blocks that are ripe for subdivision and which could provide a large number of smaller, more affordable homes in established suburbs," Mrs Arnold said.
She called for stamp duty to be abolished for seniors who are downsizing as recommended by a recent Upper House Committee report to the WA Parliament.
Perth is the most suburbanised city in Australia, with great expanses of houses on blocks but limited opportunities for medium density living when compared to the other states and territories.
"In order to provide affordable housing to essential workers, we really need to provide smaller group dwellings on good transport routes, such as the train line, so that buying and renting is cheaper and access to work does not rely on a car," Mrs Arnold said.