Across Australia, finding a place to rent is extremely difficult, rents are increasing rapidly and quick-fix solutions and blame shifting will not solve the problem, says the Real Estate Institute of Australia (REIA).
The REIA this week called on the State and Commonwealth Governments to stop passing the buck and address the issue of home loan and rental affordability seriously.
"It is the right of every Australian to be adequately housed and we call upon our Governments to begin showing leadership in addressing this matter," said REIA President Graham Joyce.
"The rental crisis will get worse as demand continues to exceed supply."
Mr Joyce pointed out that the supply of rental property is tight because investors have left the market to take advantage of other opportunities providing better yields and with fewer taxes (there are no holding or transaction taxes on shares, yet investors in property are subject to land tax and stamp duty).
Construction of new property for investment has lagged, with building skills shortages, land release problems and high development costs major inhibiting factors.
"Affordability for home buyers is very poor, at its lowest point in 25 years aside from an 18 month period from March 1989 to September 1990. Increased migration and area-specific population growth driven by the commodities boom have also contributed to greater demand for rental properties.
"Increases in rents are not just a market response to tight vacancy rates, but also to yields. As house prices have risen across the country, the taxation burden on investors has also risen, with State Governments dramatically increasing their revenue from stamp duty and land tax," Mr Joyce said.
"However, yields were low, and investors were unable to recoup their costs. Yields are still well below those being earned elsewhere, and market forces are now in play to push rental yields up. This is not about investors being greedy or rapacious - it is about a fair return for dollars invested and investment risk taken," he added.
The REIA believes that the State Governments should be doing more to lower the systemic costs imposed on property investors - by reducing or abolishing stamp duty and land tax, by lowering development costs, addressing skills shortages and ensuring land supply is sufficient to meet demand.
"The Commonwealth Government is exacerbating the problem," said Mr Joyce.
"As a result of transition arrangements for superannuation announced in the 2006 Commonwealth budget, REIA members report that many property investors are selling investment property to take advantage of the ability to shift up to $1,000,000 into superannuation before 30 June."
Some of the selling is to first home buyers who have been living at home and saving a deposit - not to other investors. It has been suggested that this is a one-off event and will ease after June. However, given that investors will be able to shift up to $450,000 within a 3 year period into superannuation after June, the REIA predicts that the sell-off of residential investment property will continue.
"This dilution of rental property supply can be checked now with a no-cost solution. The Commonwealth Government should immediately allow the transfer of unencumbered residential investment property into self-managed superannuation funds, in the same way that other asset classes can be transferred now," Mr Joyce suggested.
"Because of the lead role the Commonwealth plays in the management of the Australian economy, it needs also to be playing a lead role in addressing the systemic problems in the housing sector and coordinating real solutions, not quick-fix responses," he added.
