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3 things driving the housing market forward

By Alanna Ngo

There are three reasons as to why the national house and unit rental yields have remained stable amid the COVID-19 pandemic, according to new research from PRD.

In its recently released report, From the Desk of the Chief Economist, the real estate group delivered key insight into the state of the market and what we can expect moving forward.

Taking a look at the past year, PRD outlined that a key reason as to why the national house and unit rental yields have remained stable amid COVID-19 in the past 12 months to September 2020 “is a combination of three forces in tandem: JobKeeper payments, mortgage holiday freezes and rental eviction moratoriums”.

“The end or extension of the rental eviction moratorium has, once again, as per when residential rental laws were re-negotiated in March 2020, caused uncertainties and imbalances in the market. This is particularly evident in light of mortgage holiday freezes ending (and not being extended) and JobKeeper payments being reduced on a two-tiered basis until March 2021,” PRD said.

“Renters who have been, or are still, significantly impacted by COVID-19 benefit. They will be able to maintain their current residency and breathe a sigh of relief. Those who negotiated a rent reduction will see a benefit, as it assists with the household’s income flow. Landlords, on the other hand, are now faced with potentially higher mortgage payments, particularly those who froze their mortgages and have compounded interest, with potentially less rental income.

“With the varying extension dates of rental eviction moratoriums (between December 2020 and April 2021), landlords may face the challenge of an end lease period, and the intricacies of either renewing (with the same tenant) or establishing a new agreement (with a new tenant).”

PRD noted that the rental market has proven its resilience to date, “continuously attracting investors and replenishing rental supply”.

“It will be interesting to monitor the rental market in the next three to six months, and how current policy imbalances impact both renters and landlords,” the group said.

The current stances on rental eviction moratorium were outlined by PRD in its report. It is as follows for each state and territory:

  • Queensland: Rental eviction moratorium is extended until 31 December 2020 on a financial hardship basis. This announcement has been supported by the Real Estate Institute of Australia as a sensible and multi-stakeholder approach.
  • New South Wales: Current residential and tenancy support grants/policies have been extended an extra six months to March 2021.
  • Australian Capital Territory: Rental eviction moratorium extended until January 2021.
  • Tasmania: Rental eviction moratorium extended until December 2020.
  • Victoria: Rental eviction moratorium extended until April 2021, with a varying range of support measures in place for tenants and home owners.
  • South Australia: An extension of the tenant support program has been made until 28 March 2021, or until the end of the South Australian emergency provisions.
  • Northern Territory: At the time of writing, an announcement is still pending.
  • Western Australia: Rental eviction moratorium extended until March 2021, with a hotline support in place for owners and tenants.
  • Sourced: https://www.realestatebusiness.com.au/
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