The Unreliable Guide to…House Hunting
The Unreliable Guide has several friends who are house-hunting at the moment and it’s not going well for any of them. Some are looking to buy, others to rent, some want a new city pad, others, thanks to lockdown, want a sea or tree-change away from the plague cities. They’re all looking for something different, but they’re united in the fact that they haven’t been able to find it.
The property market right now is like an insanely overpriced op-shop, full of crap priced way above its real value. I’m watching my friends trying to fit themselves into the wrong things: “Oh, look! A torn, lime green t-shirt two sizes too small! A bargain at $100. I know I’ve always hated lime green and these shirts were $5 in 2020, but hey – that’s the market.”
They’re trying hard, but paying off these badly fitting properties will leave them with empty pockets for the next few decades. If this sounds like you, never fear, The Unreliable Guide is here to help you understand why it’s so hard to find the perfect fit right now.
Renting has never been so hard. Both in the city and out in the country there’s a serious deficit of rental properties. Part of the problem is that more and more people want a second home these days, but the biggest issue according to local real estate agents is the booming Airbnb market. Why rent an apartment for $700 a week when you can get $3,000-plus a week during peak season? Twelve weeks of Airbnb is equivalent to a full year of long-term rental, which means you can either make a motza or use the place yourself for the rest of the time. And that is why, with negative gearing to mop up any incidental costs, short-term property lets are now eating up a vast percentage of the rental market. The government is trying to stop this in high-demand areas like the Eastern Suburbs with a six-month short-term rental cap in any one year, but it’s doing nothing to alleviate the problem. The Unreliable Guide has no easy answer to this, but we should look at places like Barcelona, which has just passed a new law that forbids short-term private-room rentals, and New York City, which has long been battling with Airbnb in an attempt to alleviate the housing crisis in the city.
If you are trying to buy a house or apartment right now, I feel your pain. Australian property is 18.4 per cent higher compared with this time last year; the fastest annual rate of growth since 1989, and Sydney’s property market has grown by 24.9 per cent. To put that into context, an average two-bed apartment in the Eastern Suburbs has increased $5,750 per week – that’s over eight hundred dollars a day! It is a seller’s market, but there are not enough sellers to go around and demand is far outstripping supply. After two years without international holidays, cashed-up baby boomers are buying up property like they’re playing a drunken game of Monopoly. Which is fine for them, but the dream of home ownership is becoming increasingly unobtainable for first-time buyers. With nothing to rent either, The Unreliable Guide fears affording a roof over your head will shift from human necessity to a luxurious privilege reserved only for the rich.
Finally, The Unreliable Guide suggests that if you need a new home right now you may want to consider investing in a tent.