Mark Hay from Mark Hay Realty Group examines the key factors driving Australia's rental shortage.
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00:00We've now come to unprecedented times where we see across the whole of Australia a shortage
00:09of rental stock and the vacancy factor is at a record low. And it's not just WA, it's
00:14across the whole of Australia. We're going to unearth how that has come about. Is it
00:19the migration? Is it the high interest rates? Is it all the builders going to the war? Is
00:24it the lack of government intervention in what's been happening? Or is it a fallout
00:27from COVID? Let's discover that now. Where we start to unravel this in the beginning,
00:35it lies fairly and squarely with the governments of the day, both local and federal, and the
00:40cumbersome process of bringing the stock to the market. The development process, the approval
00:45process is way too long, way too inhibitive, and we need to free it up to help bring stock
00:50into the market faster. My colleagues have been saying for a long time, it's gone unheard.
00:56Consequently, this shake-up in the building industry has been catastrophic. Everybody's
01:00probably aware we've had over 100 builders go under last year and some great names, Pindan,
01:06Jackson, Firm, ProBuild, all gone forever. And what a lot of people don't understand,
01:12in the whole of Australia there was over 1,200 construction firms go bankrupt in last year.
01:18In the first two months of this year alone, the first two months we've preceded that.
01:22We've got over 1,200 firms gone under. What does that hold for us in the future? Probably
01:26this, holes in the ground and an appetite where builders and developers are a little
01:31bit tardy about putting their toe in the water. So that's going to further constrain the supply
01:36stock shortage that we have there.
01:41So the second key to this is the COVID crisis. Now, on the other side of what's happened,
01:46we can all be wise in retrospect, but the governments of the day acted very responsibly,
01:50but they handed out a lot of handouts and those handouts exacerbated the building boom
01:55because we had a supply shortage, we had a labour shortage because of lockdowns with
01:58COVID. I think it's two years for me to get my new car at the moment. So there's a supply
02:02shortage, labour shortage that constricted the building market. Plus we had handouts
02:07going up to $50,000. If you were a smart first home buyer in Perth, you could save about
02:1250 grand. And so we had a lot of people jumping on the bandwagon. So the builders within a
02:16matter of 12 months went from being on their knees to actual boom. And unfortunately, now
02:20we see a bust.
02:24So the other key to the equation is migration. I think we've got 950 bobbies coming to WA
02:29alone. Our building industry needs more people to work in the building industry, but where
02:34will they live while they're building the accommodation that they've got to stay in?
02:37It's a conundrum. But on top of that, the big elephant in the room is interest rates.
02:43The global banking system, we've had the Bank of Switzerland, the Deutsche Bank, the Silicon
02:48Valley Bank, we've got banks having a run on. And the idea of interest rates, certainly
02:53they seem to have peaked or close to peak now. But the worry of inflation recession
02:57is making it uncertain for developers and builders say, look, I'll put my hand in my
03:00pocket and I'll go and build that property to help with the supply shortage. So I think
03:05we're going to have a supply shortage for quite some time, especially as WA is the place
03:09to be. We've got so many people coming in. So I think the governments of the day have
03:13got to wake up and everybody's got to pull together to make sure that we get through
03:16this crisis with as little damage as possible.