Real estate agents across the globe are bracing for the rise of the condo-as-rent, with home sales rising at their fastest pace in more than a decade.
But the rise has been accompanied by a surge in home prices, which has put pressure on rental properties.
As the supply of properties in use rises, so does the demand for new listings, said John O’Neill, founder of Real Estate Australia, the national real estate agents association.
The number of listings in the housing market has increased by more than 20 per cent in just one year.
“We’ve seen a real estate crisis and now it’s going to be the condo boom that starts to get a little bit bigger than we anticipated,” Mr O’Neil said.
“The condo boom is really the new normal.”
Australia has seen a boom in the condo market since it became a fully-regulated market in the late 1990s.
It has now reached about one million listings, or about 7 per cent of the market, according to a report from real estate agency Macquarie Research.
The industry is still a relatively small one, but it’s growing fast, and is projected to reach a total of 8.6 million listings by 2021.
Real estate agent Andrew White, of Macquade Real Estate, said the growth of the new condo market had coincided with a sharp increase in demand for rental properties across the country.
With prices continuing to rise, Mr White said the trend towards rental properties was now “on track to reach its highest levels in the past five years”.
“This is a real opportunity for the market to get back to where it was in 2010 and to build a more resilient market,” he said.
The boom in new rental properties has been aided by a number of factors, such as the availability of affordable rental properties, the fact that many property owners are now able to buy back their homes, and the government’s recent moves to relax restrictions on foreign buyers.
A housing affordability crisis has been gripping many of the country’s inner-city areas for the past few years.
Mr O’Brien said there were now a number new rental developments in Sydney, with the latest in January adding two new units, a large office and a new supermarket, to the burgeoning suburb of Marrickville.
However, Mr O”Brien said the condo trend was not slowing down, with several more developments expected in Sydney’s inner north-west, with a further 15 to 20 planned by the end of the year.
“The growth of rental properties is now more than offset by the supply crisis, which is the result of a number developments in the outer suburbs,” Mr Brown said.
“It’s a problem of supply and demand.”
“The market has gone from being one of the most highly populated in the world to one of its most unproductive.”
Mr Brown said the issue was not just housing, but also the “rise of the suburbs”.
He said there was “some good news” in the latest National Housing Report from the Australian Bureau of Statistics, which showed that the number of properties occupied in regional areas of Sydney and the ACT rose by 1.2 per cent over the year to reach 2.5 million, or 8 per cent.
There were also some signs of growth in the number occupied by single-detached dwellings in the ACT, which fell by 2.2% in the year and now represents 4.4 per cent overall.
But there are concerns over the future of rental housing in Australia.
One of the biggest concerns is the increase in house prices in Sydney and Melbourne, where developers are now building apartments for the same prices as townhouses.
While many properties in Sydney are already selling for more than their market value, developers are taking advantage of the rising demand for detached houses to create a market that is still relatively small.
And while rental properties have also seen a rise in popularity, some are now turning to the suburbs for new growth, with many now looking to buy properties that were previously in their backyard.
In Melbourne, Mr Brown warned that if developers did not build affordable homes for the next 10 to 20 years, it could mean the end for the suburbs, which are now “the world’s most expensive housing market”.
“If you are not building affordable housing, then you are creating a housing bubble,” he told 7.30.
“If you have to build it now, then the housing bubble is going to burst.”
The issue has come up in recent months as the government has loosened its restrictions on overseas buyers.
But Mr Brown says while there are issues, the rental market has been doing well.
“I think there’s a huge amount of pent-up demand out there and it is fuelling the rental housing market,” Mr White, the Macquare Research co-founder, said.