Tuesday,3rd of November 2009
RENTAL CRISIS INCREASING WITH INTEREST RATE
RISE TO FORCE RENTALS TO ESCALATE AND SLOW
The likely decision by the RBA to lift rates tomorrow will only make the rental
market tighter and less affordable across Australia. The rationale that higher rates
will dampen a housing price spike is little comfort to the majority of Australians that
cant find accommodation without suffering rental stress.
When you consider Federal Government findings have identified that the population
growth is becoming a serious problem due to increasing migration and fertility rates
the problem is going to get a lot worse, said Mr Ashley Fenn, Director Ethan
With the spike in population and a decreasing supply of housing, you dont have to
be a genius to work out there is a looming storm thats about to hit.
The number of new home sales fell by 4.5 per cent in September, according to the
latest Housing Industry Association (HIA) survey of Australias largest builders.
Whilst the housing market has relied heavily on the first home buyers over the past
twelve months it is in danger of stalling further as the grants that fuelled the demand
are being wound down.
Furthermore, without the return of the second tier financiers that were the main
lenders to investors and small developers the market may not have another class of
purchaser to drive the demand for construction, Mr Fenn said
We are very excited about The National Rental Affordability Scheme, (NRAS)
which the Federal Government has designed to take pressure off rental stress, but it is
unlikely to make an impact until a significant number of the dwellings are constructed
over the next few years.
Demand for the NRAS subsidized homes that offer a 20% discount under market
rent is very strong, as families that would not normally seek rental assistance for
accommodation are finding that the rental stress is becoming a significant issue, Mr
In our view the one size fits all solution of using interest rates to slow inflation is
actually causing the opposite, by raising interest rates and consequently decreasing the
housing supply the pressure on rentals increases
Addressing other issues such as the release of available land, planning delays, taxes
on housing and inappropriate land banking in urban areas could be some alternative
measure to keep prices down.
Nothing reduces prices more effectively than when supply exceeds demand,
according to Mr Fenn
Media Liaison: Darryn Keneally 0410 344 761
Ethan Affordable Housing is a Not for profit organization that provides
affordable housing solutions to low and medium income families, identifying and
providing solution-based outcomes to the communities.
Uniquely, Ethan Affordable Housing combines business and private sector
investment with government assistance to create sustainable affordable housing
Ethan Affordable Housing is participating in the joint Federal and State
Government initiative to build and rent homes under the NRAS scheme. Ethan
Affordable Housing received 148 approvals in September from the round two
Ashley Fenn has over 20 years experience in the construction and property
development sector, he sits as chairman and Director of Ethan Affordable
Housing Limited, Director of Ethan Property Group and holds interests in
Agriculture and International Trade businesses.