Residential-for-rent. Housing market disruptor

How ‘residential for rent’ may change Australian housing

Potential game changer that could undermine what is one of the most expensive housing markets in the world.

Fragmented investor base holding low yield not really suitable housing assets (spurred on by capital gain expectations and tax benefits) vs Corporate investor building better fit for purpose product.

Including housing in means testing of pension could also spur older demographics to more appropriate housing that still needs to be built.

The Australian economy is productivity starved - the status quo that sees cheap money flow to non-productive price growth of existing stock needs to give way to building more appropriate housing stock.

The government could either speed or hinder the transition with policy settings - but ultimately the macro is just about set to see much more corporate money flow to institutional residential rent products and the increased supply will change the market dynamics.

 

I call BS on the article mostly. Why would the Australian market suddenly start moving towards institutional lessors all of a sudden? Just because that's happened in other countries?

 

The last bit says it all. Institutional rental prop has not been a big thing due to tax policy. That isnt changing for now. Relatively low yield, land tax and negative gearing by private landlords makes institutional rentals less attractive.

 

Because the return on investment is starting to stack up for the institutional money in comparison to use of capital in other ways or locations. And the renter base of Millennials and following generations (in general) seem to have a different mindset to the way Australians used to think about homeownership. A more global thinking. Accommodation fit for purpose where it is needed and utilising other means not necessarily linked to their accommodation for investment to secure their longer-term futures.

Australia is desperately in need of a productivity boost to get wages moving, so this time government at all levels is less likely to be a hinderance despite what the new investment may mean to existing investments. For so long Australia has resisted the creative destruction process of un-feted capital in relation to our housing market and now the country has expensive housing and poor productivity. If you believe that will never change – fair enough, I can't say for sure you will be wrong – we invest how we think, and we reap what we sow.

I posted the link because I believe the Australian housing market will change. Whilst my exposure is somewhat limited because I don’t directly invest in residential real estate (other than private use property) those changes guide some of my share investment decisions.

 

I believe this is also referred as Build to Rent;
https://www.watoday.com.au/national...en-perths-apartment-boom-20171010-gyy1pq.html

 

See I don't think this is the case at all. If anything, the recent generations have been living through an age where all they've seen are property owners who have benefited from some of the biggest boom periods in living memory, on top of the usually cited benefits of owning your own home.

 

Genx used to be flighty and running overseas. Until they got to a certain age and started having families.

 

Yeah nah. Not gonna happen to any massive extent.

Not for the psyche of Aussies.