Page 1403 - Week 05 - Wednesday, 12 May 2021
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Something that I do not think has been understood well enough in the ACT—none of the aggregated figures from data point analyses shows it; perhaps this could be the next level of data that they provide—is that one of the reasons that Canberra’s properties are the most expensive to rent is that they are the largest properties, not just in Australia, but often in the world. The average size of a Canberra house is up to 240 square metres. That is way bigger than comparative properties in other parts of Australia and certainly way bigger than elsewhere in the world.
We have also just been through a period where hundreds and hundreds of millions of dollars have been invested by Canberra property owners in their properties. A lot of that is owner-occupier, but some is rental stock. Why? Because they were in lockdown and everyone decided to go to Bunnings and do a home reno project or get professionals in to do something to improve bathrooms, kitchens et cetera. They spent hundreds and hundreds of millions of dollars.
Rent prices are going up everywhere. That is where I am going, Mr Parton. We have bigger houses and we have better houses. When people invest, as they have done, supported by $25,000 grants from the commonwealth government if you spend $150,000, they are going to be expecting a return on that investment, and the return on that investment flows through into the rental price.
As is often commented upon in this place, the cheapest rentals in Canberra are the lowest quality housing. That is the market operating. But we have to face up to a reality here: if we have the biggest houses, and they are the best equipped and we are spending even more money on them, then rents are going to go up. It is not the only reason, but it is a factor, and you cannot deny that it is a factor.
Equally, land taxes applied by the ACT government are fully tax deductible as an expense against the income that a landlord earns in their rental.
Mrs Jones: Thirty per cent.
MR BARR: It is fifty per cent, depending on the income of the landlord. It is a considerable amount back.
This is a much more complex set of economic interactions than is often considered. Ultimately, what is necessary is a dramatic increase in the supply of permanent rental properties. Unfortunately, that is not going to be achieved, one at a time, off the back of mum-and-dad investors. To get our rental stock from about the 40,000 to 45,000 properties that we have at the moment to over 50,000 in a hurry is going to require large-scale institutional build-to-rent projects, and there is a need for at least 200 to 300 dwellings in order for them to be viable. That is the path that the government is pursuing in addition to initiatives like the one we are discussing today.
Yes, we will seek to incentivise more mum-and-dad investors to utilise this scheme to have properties in the affordable space. But if we want to get another couple of thousand rental properties into our rental market in the next two to three years, that is only going to be achieved through large-scale build-to-rent projects. That is going to
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