Are We Blaming the Wrong People for Australia's Housing Crisis?

Blaming landlords feels satisfying, but it doesn’t build a single extra home. We take a hard look at Australia’s housing affordability problem and ask a pointed question: are we targeting the wrong cause while prices and rents keep climbing?

Samantha Eason in this episode will break down the forces that quietly drive the Australian housing crisis, starting with the rising cost to create housing. When materials, insurance, council charges, compliance, and finance all surge, replacement cost rises and existing home values follow. We also talk interest rates and why higher borrowing costs squeeze everyone, not just property investors. From there we get practical about the rental crisis: rents move when supply is tight and demand is strong, not because a landlord wakes up and “sets” the market.

Negative gearing gets its own reality check. We explain what it is, what it is not, and why it only applies when an investor is making a loss. We also dig into the uncomfortable but practical truth that most rental properties are owned by everyday Australians, not governments, and pushing investors out without replacing housing stock can worsen shortages. Then we tackle minimum housing standards, why safe housing matters, and how well meaning regulation can sometimes price low cost rentals out of existence, especially in older homes that have historically filled the affordability gap.

We finish by challenging the modern expectation that a first home should be a forever home, and we share a grounded alternative: take the first step, build equity, and progress over time. If you want clearer thinking on housing supply, rental affordability, and Australian property policy, hit play, then subscribe, share the episode with a mate, and leave a review so more people can find the conversation.

If you have any questions or scenarios you would like us to discuss on an upcoming episode, please email samantha.eason@exclusivelymanaged.com.au or visit https://www.exclusivelymanaged.com.au/

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Transcript

Are We Blaming The Wrong People

0:00

Hello, Samantha Eason here with another episode on Real Talk for Property Investors. Are we blaming the wrong people for Australia's housing crisis? Today I want to talk about something that seems to come up every time housing affordability is discussed in Australia. Negative gearing, property investors, landlords, first home buyers, rental affordability, housing affordability. No matter where the conversation starts, it always seems to end up in the same place. Investors are buying too many properties. Negative gearing is making housing unaffordable. Landlords are the reason young Australians can't get into the market. And if we simply made property investment less attractive, somehow housing affordability would improve. Now, before I go any further, I want to make something clear. Housing affordability is a genuine problem. There are people struggling to buy their first home. There are people struggling to pay rent. There are families feeling financial pressure every single week. None of that should be dismissed. But where I think we've gone wrong is in assuming that property investors are the primary cause of those problems. Because when I look at what's happened over the past five, ten years, I don't see a housing

Why Replacement Cost Lifts Prices

1:25

affordability crisis caused by investors and landlords. I see a housing affordability crisis caused by housing becoming more expensive to create. Material costs have increased, insurance premiums have increased dramatically, developmental costs have increased, council infrastructure charges have increased, interest rates have increased, compliance requirements have increased. Virtually, every cost associated with creating housing has increased. If you built a home 10 years ago and built the same house today, the difference in cost would be staggering. It would be about $150,000 to $200,000 more expensive. And that's the important part because people often forget that established homes don't exist in a vacuum. If it costs significantly more to build a home today than it did 10 years ago, then naturally the value of existing homes increases as well. Because if it costs $800,000 to replace something today, the existing version doesn't suddenly become worth $400,000. The replacement cost influences the value. That's not greed, that's not negative gearing, that's not investors manipulating the market. That's simply how markets work. The same thing has happened with food, the same thing has happened with cars, the same thing has happened with insurance, the same thing is happening with construction. Everything costs more. Housing is no exception. Then we'll talk about interest rates. Because for a period of time, Australians enjoyed some of the lowest interest rates we've ever seen. Money was cheap, borrowing was cheap, mortgage repayments were manageable. Since then, we've experienced a rapid increase in interest rates. And

Interest Rates Change Everything

3:40

when the cost of borrowing increases, the cost of housing increases. That doesn't just affect investors, it affects owner-occupiers as well. If the family paying a mortgage on their home has felt exactly the same pressure as the investor holding a rental property, yet somehow the conversation almost always comes back to landlords and investors, which brings me to a question I keep asking. If investors are supposedly the reason rents are increasing, why are rents continuing to rise while investors are leaving the market? If investors have so much control over rents, why weren't they charging today's rents five years ago? If landlords are simply greedy, why didn't they all decide to increase rents by another $200 per week back in 2020? The answer is because landlords don't determine rents in isolation. The market determines rents. A landlord can ask for whatever they like. A property manager can recommend whatever they like. But if nobody is willing to pay it, the property sits vacant. The reality is that rents are determined by supply and demand. If there are 20 families looking for 10 rental properties, rents increase. If there are 10 families looking for 20 rental properties, rents decrease. It's really that simple. And that's why I believe Australia's biggest housing problem isn't negative gearing. It is housing supply. For years we have failed to build enough housing to meet demand. Population growth has continued. Migration has continued. Demand has continued. Yet housing supply has struggled to keep up. As a

Rents Follow Supply And Demand

5:30

result, more people are competing for fewer properties. And whenever that happens, prices increase. That's not politics, it's economics. Now let's talk about negative gearing, because this is probably one of the most misunderstood topics in Australian property. Somehow negative gearing makes investors rich. It doesn't. In fact, negative gearing only exists when an investor is losing money. Think about that. The property isn't making money. The property is costing money. The rent being received isn't enough to cover the mortgage, the rates, insurance, maintenance, and other expenses associated with owning the property. The investor is already contributing money from their own pocket each month to keep that property. Negative gearing doesn't eliminate that loss. It doesn't magically turn a loss into a profit. It simply provides some tax relief against a loss that already exists. And that's where I think the conversation often misses the point. Because nobody buys a negatively geared property because they enjoy losing money. Nobody wakes

Negative Gearing Explained Simply

6:55

up and says, I'd love to pay $500 a week out of my own pocket. Investors purchase negatively geared properties because they believe the long-term benefit outweighs the short-term cost. They're making a decision that today's sacrifice may result in tomorrow's reward. It's no difference to a business owner investing money into staff, equipment, technology, or infrastructure. They're not doing it because it improves today's cash flow. They're doing it because they believe it will create a better financial outcome in the future. Property investment works much the same way. And whether people agree with negative gearing or not, it is important to understand why it exists. It exists because governments know they cannot provide enough housing on their own. The Australian housing system relies heavily on private investors. That's a fact. The overwhelming majority of rental properties in Australia are not owned by governments. They're not honed by housing departments, they're not owned by massive institutions, they're owned by everyday Australians. Teachers, nurses, police officers, tradespeople, small business owners, mums and dads, people who have purchased one investment property and are trying to create financial security for themselves and their families. If every investor sold tomorrow, governments would somehow need to replace millions of rental properties. The reality is they can't. And that's why I sometimes struggle to understand the argument that makes that's making property investment less attractive will somehow solve the rental crisis. Because if fewer investors enter the market, who exactly is providing rental accommodation? If more investors leave the market, who exactly is housing Australia's renters? That's not a political question, that's a practical question. And one that isn't getting answered. Another thing that often gets overlooked is risk. Property investors are frequently portrayed as people sitting back collecting rent while property values increase. But anyone who actually owns investment property knows that's not how it works. Properties require maintenance. Tenants can and do stop paying rent. Air conditioners fail, hot water systems fail, roofs leak, insurance premiums will go up, interest rates will increase, storms happen, floods happen, fires happen. There are investors across Australia who have experienced losses of tens of thousands and sometimes hundreds of thousands of dollars through circumstances completely outside their control. The reward exists because the risk exists. If there was no risk, there'd be no reason for investors to expect a return. Let's move on to another topic that I think deserves far more attention than it receives. Minimum housing standards. Before anybody misunderstands me, every person deserves a safe, secure,

Private Investors Fill The Rental Gap

10:05

and habitable home. That's not up for debate. Safety matters. Healthy housing matters. But there is a difference between ensuring housing is safe and expecting every property to perform like a newly built home. One of the biggest mistakes I think policymakers make is assuming every property should offer the exactly the same standard regardless of whether it was built in 1960 or 2022. The reality is that older homes were built differently. They were built under different building codes. They were built using different materials, often cheaper. They were built to different expectations. That's okay. Not every property needs to be the same. In fact, those differences often create affordability. Historically, older homes have provided lower cost options because they don't offer every modern feature available today. They have quirks, they have imperfections, they have characteristics that come with age. And while they may not compete with a brand new home, they provide something incredibly important. Affordable accommodation. One thing I think the government underestimates is the unintended consequences of regulation. Every regulation is introduced with good intentions, every policy is designed to improve something. But regulations also have consequences. If a landlord spends $30,000 upgrading a property, that cost doesn't disappear. If a landlord spends $150,000 complying with the new requirements, that money doesn't magically appear. The cost is either absorbed through lower returns, high rents, or the property being sold altogether. Sometimes we improve standards, but sometimes

The Risks People Forget

11:55

we also remove affordable housing options. The property that rented for $400 a week suddenly needs to rent at $650 a week. And that's with negative gearing. The affordable property becomes a mid-range property. The lower priced option disappears. That's exactly what we've seen. And the family who could only afford $400 a week now has fewer choices. Affordable housing doesn't always mean new housing. Sometimes affordable housing means older housing. Sometimes affordable housing means accepting imperfections in exchange for lower rent. Sometimes affordable housing means preserving different levels of accommodation rather than forcing every property into the same category. And I know this next point won't be popular with everyone, but I think it's important. We've lost sight of what home ownership traditionally looks like in Australia. Today there seems to be an expectation that every first home buyer should be able to purchase a detached family home in a major capital city, close to employment hubs, close to transport, close to schools, and close to lifestyle amenities. And while

Minimum Standards And Higher Rents

13:05

I understand why people want that, I don't know if that's ever been the reality. The mistake I think many people are making comparing their first property purchases to the home their parents currently live in. They're comparing their starting point to somebody else's finish line. Most 60-year-olds didn't buy the home they're living in today when they were twenty five. Most didn't buy their forever home as their first home. Most didn't walk straight to a four bedroom house in a highly desirable suburb. They bought what they could afford. They made sacrifices, they bought units, they bought townhouses, they bought homes that needed work. They bought in locations that weren't necessarily desirable at the time. Then they built equity, then they paid down their debt, then they upgraded, and then they upgraded again. And often they upgraded several more times before ending up where they are today. The home they're living in today is often the result of 30 or 40 years of progression through the property market. Somewhere along the line, we've created an expectation that a first home should also be a forever home. We've created an expectation that if somebody can't immediately buy them one of the most desirable parts of a major capital city, then home ownership has become impossible. The reality is that desirable locations have always commanded premium prices. If a suburb has excellent schools, strong employment opportunities, great transport, and limited housing supply, demand will naturally push prices higher. That's not unique to housing. That's how every market works. Property ownership has traditionally been about buying what you can afford where you can afford it, and then using that property as a stepping stone to the next one. That's how many Australians have built wealth. That's how many Australians eventually ended up in the homes that they're living in today. And I sometimes wonder whether we're doing young Australians a disservice by constantly telling them that if they can't immediately buy their dream home in their dream suburb, then home ownership is unattainable. Because for most generations before them, home ownership wasn't about buying the final destination first. It was about taking the first step. Before we wrap up the episode, I want to leave you with a few questions. If investors are the problem, why are rents continuing to rise while investors are leaving the market? If negative gearing is the problem, why do we still have a housing shortage? If housing affordability is the objective, shouldn't we

First Homes As Stepping Stones

15:50

be talking about how to increase housing supply, then how to discourage the people currently providing the majority of rental accommodation? And if we genuinely want affordable housing, shouldn't we be preserving affordable housing options rather than regulating them out of existence? Whether you're a tenant, homeowner, investor, or first time buyer, I think we can all agree on one thing. Australia needs more housing. We need more housing options. We definitely need more affordable housing options, more diversity in the types of homes available. Because housing affordability isn't solved by blaming landlords. It isn't solved by blaming tenants, and it isn't solved by blaming first home buyers. It's solved by creating enough housing to meet demand. Until we do that, we're simply arguing about how to divide a pie that isn't big enough for everyone. Because at the end of the day, you cannot regulate your way out of a housing shortage. You can only build your way out of one. If I was a first home buyer, I would look at buying a block of land and building an affordable home. You can do that in Brisbane, especially in the northern suburbs and some of the southern suburbs, for about 700 to 800K. It's not meant to be your forever home. It's not meant to be a flash marble inclusions, high rate to ceilings home. That's not what it's meant to be. But it's also not meant to be your forever home. Thanks for joining me for another episode of Real Talk for Property Investors. I will see you next time.