10,000 More Australians To Join Ranks Of New Homeless If Predicted 0.5% Increase In Interest Rates Happens On Melbourne Cup Day

Property Club, Australia’s largest independent property group warned that at least another 10,000 Australians will be without a rental home if a predicted 0.5% increase in interest rates by the RBA occurs on Melbourne Cup Day.

Kevin Young, President of Property Club said that if Westpac Bank’s prediction of a 0.5% increase by the RBA proves correct, then rents would go through the roof.

Australia has a supply problem of rental houses that have driven up rents in Australia’s capital cities by over 20 per cent during the past year. This supply problem is highlighted by the fact that new home starts have fallen by nearly 30 per cent over the past year in Australia.

As a result, thousands of people are unable to secure a proper rental home and are being forced to temporarily live in caravans, motels, couch surfing or even living in tents.

This new generation of homeless Australians will have their ranks swelled by at least another 10,000 people over the next year if this 0.5 per cent interest rate increase goes ahead.

It will present another major hurdle for investors to overcome as they will find it very hard to secure finance because of the bank’s buffer rate of 3 per cent when they assess a home loan application.

If this interest rate rise goes ahead, people wanting to buy a rental property to rent out will effectively be assessed on their ability to afford at least a 9 percent interest rate once the buffer is added to the predicted increase in interest rates on Melbourne Cup Day.

As a result, property investor activity will slow down dramatically and rents will rise to a level that even average wage earners will find it difficult to pay.

Low-income earners and those on government welfare payments have so far been the worst affected by rising rents but soon an even larger number of people will be hit by unaffordable rises in rents due to investors leaving the market because of excessive interest rates.

Rising rents will also feed into inflation resulting in more interest rate hikes and an ever-shrinking number of available rental properties. Property Club believes any further rises in interest rates is economic madness and socially irresponsibility.

"Property Club developed a four-point plan to fix Australia’s growing rental crisis that is revenue neutral,” he said.