The recent National Cabinet decision to put an end to the idea of rent caps could see more Victorian landlords resist the urge to sell up and instead hold on to their investments.
The announcement was made last month and coincided with proposals to build over one million new homes within six years and an offer of a $3 billion New Home Bonus for the states and territories that build the most.
State governments around the country did agree to increase tenant rights by ensuring requirements for reasonable grounds for evictions and a limit of one rent rise per year.
The rent cap discussion came off the back of a Greens policy idea to impose a two-year ban on raising rents, and the Victorian Government decision to reject the idea has pleased the real estate industry as a whole.
Key stakeholders say the policy would see investors sell up which would ultimately discourage the supply of new housing and lead to even higher rents, which is the opposite of the goal.
“It’s a win for common sense,” Real Estate Institute of Victoria chief executive Quentin Kilian told realestate.com.
“And I’m extremely hopeful we will see investors now hanging on to those properties rather than bringing them on to the market.”
Outgoing Reserve Bank governor Philip Lowe was happy to speak out against the proposal.
“Giving people more money or capping prices doesn’t help with the balance of supply and demand in the market,” he said.
“In most cases rent controls reduce the incentive to add supply.”
It is hoped the decision helps to turn around figures such as those from PropTrack which recently revealed that 29 per cent of the state’s house sales for the month of June were properties that had been rented out since the last time they were sold – showing a rising number of investors jumping ship.
Master Builders Australia chief executive Denita Wawn told realestate.com the state had dodged a bullet by rejecting the proposal.
“With parliament returning in a matter of weeks, it’s imperative the Greens and Opposition now put politics aside and pass the Housing Australia Future Fund and housing supply bills,” Ms Wawn said.
“We cannot afford to play politics with the lives of many Australians who are struggling to absorb the increases in the cost of living and housing costs.”
With the time it takes to build the new homes Victoria needs being a major hurdle to fixing housing shortages in the near term, the state faces a real challenge providing enough properties for people to buy and rent over the coming years.