'Harder and harder': How investor exodus has heightened Border rental pain

Will Bonnici, managing director of First National Real Estate, said compliance costs and land taxes imposed by the Victorian government in recent years have led to a drastic decline in rental availability in Wodonga.

"There are noticeably fewer available properties," Mr Bonnici said.

"Unfortunately, due to some of the restrictions and government taxes, we are seeing an exodus of what I'd call mum and dad investors from the rental market.

"Because we are a cross-border business, we are seeing people selling properties in Victoria and reinvesting in NSW. And unfortunately for our region, not necessarily in Albury."

Data from CoreLogic reveals that rental prices in Wodonga have surged by about 40 per cent over the past five years, nearly doubling that of its cross-border counterpart.

In 2024, renters can expect to pay almost $50 more per week for a house in Wodonga compared to Albury.

Mr Bonnici argues the Victorian government's additional land tax, introduced as part of its 2023/24 budget, is a major factor behind the increase.

As of January 1, the threshold for Victoria's land tax was lowered from $300,000 to $50,000, impacting about 380,000 home owners.

The decision has had unintended consequences for renters, with many landlords either reinvesting interstate or raising rent.

"If someone owns an investment property, they're not necessarily doing well. They've taken the risk," Mr Bonnici said.

"Additional taxes just makes it harder and harder and harder.

"And the way things are going, we'll have more people saying, 'well, it's not worth it, we may as well be on welfare'."

In 2021, over 130 new rules were added to the Residential Tenancy Act.

This, Mr Bonnici says, is another reason investors are leaving the state.

"Make no mistake, nobody is complaining about making the property safe and habitable," he said.

"But some of these restrictions are just over the top.

"Locks on windows, for example; we've got some properties in rural areas that barely have keys for doors. So the problem is that these rules are made for Melbourne and regional cities, but they've made it a blanket rule across the state."

Mr Bonnici said successive interest rate rises has also put the pressure on "mum and dad investors".

'A lot of people are feeling the pinch and then going, I may as well just put money in the bank," he said.

Mr Bonnici said the lack of public or affordable housing is further exacerbating the rental crisis.

"It's going to be an issue and it's going to get worse before it gets better," he said.

"We're seeing the same number, if not more applicants, for less stock.

"That will drive prices up because people will go, 'well, I'll pay a bit more', and people that can will. And people that can't will be stuck homeless. We will have nowhere to put them."

Share house living is growing as the rental market remains tight and high living costs prod home owners to rent out spare rooms.

Online share accommodation site Flatmates has recorded an 18.8 per cent increase in new listings since this time last year, but even with that boost, demand for rooms is still dramatically outpacing supply.

Community manager of the platform, Claudia Conley, said increased interest in share housing, represented by a record-breaking 212,000 active members on the platform in January, was partly fuelled by normal domestic and overseas migration trends in the summer months.

"The university semester is about to start, many members are looking to move for new jobs, most leases are renewed at this time of year and migration is high as people flock to Australia for that quintessential Aussie summer experience," she said.

But she said the record-breaking activity on the platform was also underpinned by the high cost of living and rental crisis pushing more people towards share accommodation.

Per Capita executive director Emma Dawson said more people were having to share house to bring rental costs down at the same time as more homeowners were having to rent a spare room.

Vacancy rates have been extremely low, pushing rents higher. Ms Dawson said this was forcing more people into sharehousing or staying in these arrangements for longer, particularly young couples who were simultaneously struggling to buy.

At the same time, mortgage holders had been hit with several interest rate rises and many were hoping to recoup those costs by renting out a room.

"The two things are leading to a spike in multiple occupant dwellings," she said.

She said this was partly unwinding the trend to smaller household formations during the pandemic when space became a priority.

"And then, as immigration has returned, and that rental vacancy crunch has really hit, we're seeing more people having to share houses in order to bring their rental costs down, and also more homeowners having to rent out a spare room in order to make their mortgage payments."

The latest Statement of Monetary Policy from the Reserve Bank noted that while average household size had increased in capital cities over the past year, it remained well below pre-pandemic levels.

Ms Dawson said residents per household were still falling short of pre-pandemic levels but said forming larger households would not solve affordability problems at the source.

"No number of homeowners renting out a spare room is going to touch the sides of the rental and housing crisis in this country," she said.

Part of the problem was a lack of well-located and suitable supply, including social housing, which can take pressure off the private market.

There were also policy options on the demand side, she said, including removing tax concessions that distort the market.