HomeBuilder scheme a ‘double whammy’ for investors

During a recent episode of The Smart Property Investment Show, REA Group’s Cameron Kusher highlighted how landlords could be the losers with the government’s scheme.

“Think about where those first home buyers are coming from. They’re renting properties. So, HomeBuilder is actually a bit of a double whammy for the rental market because it’s pulling out some of your rental demand when rental demand is already weak,” Mr Kusher said.

“So, it’s going to potentially make it even tougher for people to be renting out their properties going forward.”

Mr Kusher explained that investors in inner-city areas are now facing the headwinds of transient-style renters, including migrants and youths, which could all have an impact on rental yields.

“If you look at what we’ve seen during this recession that we now have, people under 30 have overwhelmingly been more impacted by job losses, and that is a profile of a renter. You’ve got borders shut. We know that international students have become a huge part of our higher education here in Australia. So, you don’t have that demand as well,” Mr Kusher said.

Mr Kusher pointed out that these means a lot of them are smaller one- or two-bedroom-style apartments, and buildings where there can be hundreds of essentially the same apartments throughout the building are the most likely to be impacted from a rental yield perspective. 

“So, I think if you’re holding that stock, then there is the possibility that you’re going to have some trouble renting that out over the next little while. But if you’ve got maybe a three-bedroom apartment, or if you’ve got a house that’s going to appeal to a family rather than it, those are the kinds of things that are probably going to put you in better state in the current market than a smaller one- or two-bedroom apartment,” Mr Kusher concluded.