Aussie retail financial services group recently reported that mortgage sizes have increased roughly in line with property values, up 376 per cent or 6.4 per cent per annum between 1993-2018. The issue is that wage growth has not risen in-line with this trend, therefore property is becoming more and more unaffordable for the average citizen, even after taking into consideration the current reduced rates of interest. In fact, the Australian Government Treasury reported wage growth of less than 2.5% for the 5 years to 2018.
Mr Anderson, Co-founder & Investment Manager of Residency Capital, said over 35% of Australia’s population now rent and is a number that is steadily increasing every year.
“For most Australian’s, renting is now a living arrangement that is opted for out of necessity rather than by choice and as a result the need for secure and quality rental accommodational is ever more important”, Mr Anderson said.
“Build-to-Rent/Multifamily developments in Australia puts the control back to tenants and offers longer term leases and ultimately security. Furthermore, developments are placed close to public infrastructure and economic hubs which ensures tenants are able to afford living closer to work and amenities, as opposed to travelling long distances”.
Renting: Private Rentals Vs Multifamily Renting
Rental options in Australia have been dominated by private landlords, lodging with family members, or government housing for those few that qualify. Other parts of the world have since moved on and introduced its citizens to Multifamily living. How does this compare to renting from private landlords?
Multifamily In The United States
In the US, affordability, quality of service and lease security have been some of the key characteristics making multifamily the preferred choice for many renters. For the single individual, multifamily apartment blocks have provided the convenience, security and luxury elements often afforded to family living. For family groups, large house dwellings on shared amenity plots are also available, catered more towards families seeking high quality residence at accessible prices.
The last 10 years, Statista has shown an underlying growth in the number of new multifamily constructions in the US, with forecasts showing continued expansion for 2021.
“The Build-to-Rent/Multifamily sector is nascent property class in Australia however with its demonstrated success in mature markets such as the U.S & U.K – momentum is being gained with recent legislative changes that supports the feasibility of this asset class being deployed”.
“With an increased attention in this sector, we expect to see the asset class to create a local and national impact that extend beyond returns”, Mr Anderson said.