First homebuyer schemes unlikely to unlock rental supply: PropTrack

The expansion of the federal government’s home buying scheme is unlikely to have a marked effect on increasing rental supply after a dive in the number of homes on offer.

The expansion of schemes to entice young people into the property market is unlikely to have a marked effect on increasing rental supply after stock levels fell at the fastest monthly rate since 2017, according to PropTrack.

Analysis from housing data firm PropTrack has revealed significant tightening in the rental pool through April, with the number of properties declining by 18.9 per cent.

A greater divergence in rental supply has also begun to emerge, with new listings in capital cities down 7.4 per cent year-on-year in April, compared with regional areas, which reported a 15.8 per cent increase.

However, the total number of homes on offer for rent has fallen by more than a third across the board since the start of the pandemic.

PropTrack’s director of economic research Cameron Kusher said this seasonal low in stock was being exacerbated by tight conditions and fewer investors buying. “There’s no meaningful increase in supply imminently arriving,” he said. “I think we'll continue to see the amount of stock drifting higher in the regional markets, and that’s just because there are fewer people leaving the capital cities, and there are people that moved to regional areas moving back.”

The rental crisis has been top of the agenda for federal and state governments. Recent data from PropTrack showed a slight easing in Australia’s rental vacancy rate, which now sits at 1.42 per cent, well below the 3 per cent considered “healthy”.

The federal government’s budget confirmed an increase in rental assistance and an expansion of its popular First Home Guarantee Scheme, to allow family and friends to jointly purchase a home with a deposit as low as 5 per cent. Previously, the scheme was available only to singles and defacto or married couples.

Mr Kusher does not anticipate it will have much impact on the country’s stretched rental market. “The exciting changes announced in the budget were pretty niche, and I don’t know that that would attract a lot more people to that scheme,” he said.

“Maybe some first-home buyers do just start to bite the bullet and say, yes, it’s going to cost me more, but I’d much rather spend that extra money in my own home and have that security of tenancy … But I could conceivably see that happening at some point later this year.”

No market recorded an increase in new rental listings month-on-month. The change was most pronounced in Darwin, which was down 25.8 per cent. Similar declines were felt in Hobart (down 21.3 per cent) and Melbourne (down 20.8 per cent).

Conditions have worsened considerably since the onset of the pandemic three years ago. The ACT and Hobart are the only jurisdictions to record an increase over the period, up 47.8 per cent and 1.7 per cent, respectively. Darwin (down 56.7 per cent), Perth (down 52.8 per cent) and Sydney (down 42.7 per cent) were hit hardest.

Originally published as First homebuyer schemes unlikely to unlock rental supply: PropTrack