When was the best time to buy property in Australia? With the way things are going, only a time machine can bring you back to an epoch whereby real estate prices were reasonable. It’s the elephant in the room, albeit one that at least most sensible people have noticed and discussed – Australia’s property prices are severely unaffordable.
Globally, Australia is one of the most expensive places in the world to buy property and Sydney, Melbourne, Brisbane, Adelaide, and Perth have all been listed as severely affordable for well over two decades now. Indeed, two of these urban areas, Sydney and Melbourne, consistently rank high in top 10 lists of most unaffordable cities to buy property worldwide.
We’ve touched on the supply and demand drivers for Australia’s real estate prices in previous blog posts, but the long and skinny of it is that demand is growing rapidly (mostly from mass migration) and supply is growing only at a snail’s pace, resulting in an equilibrium point (price) that is skyrocketing out of reach of most.
Are Dual Occupancy Homes the Answer to Housing Supply Issues?
Dual occupancy homes have been quite trendy for well over a decade now, for a wide variety of reasons – not just price constraints. The flexibility of designs, more reasonable housing size for modern families, and the ability to subdivide plots of land in suburban and even urban Australian cities located near necessary amenities all make them a great investment choice to begin with.
Dual occupancy homes normally convert one older property (technically, the land) into a subdivision of two plots. In essence, most add a net 1 to the housing supply (2 if the land was unoccupied previously). Alone, dual occupancy homes won’t resolve Australia’s housing crisis; significant efforts must be made on the demand side as well.
Investing in a Dual Occupancy Home is (Almost) Guaranteed Income
As of May 2024, Australia’s residential vacancy rate was sitting at a very low 1.2 per cent. Many economists believe that rates surpassing 3 per cent are healthy, enabling some laxity in what are otherwise somewhat sticky prices. Rates of 1.2 (or even lower as seen in much of 2022-2023) make it extremely competitive for tenants, but for landlords this can be a boon.
Landlords might see less turnover of their lettings since tenants may be too afraid to risk moving, perhaps fearful that they cannot find another property due to excessive demand. Low turnover means less need to gamble on an empty flat for a month or longer (lost revenue), less need to consistently market the property online through listings, and more steady and stable income.
Although landlords should always endeavour to care for their tenants by attending to their needs, such as performing essential remedial works and repairs, keeping long-term tenants can be a great win-win for both parties.
Now, if you’re letting both properties (of a dual occupancy home), that is potentially twice the rental income with both tenants more likely to remain for longer periods of time and more willing to pay fair prices due to stiff competition amongst other prospective tenants for a dwindling supply of properties.
Are Dual Occupancy Homes a Gold Mine for Landlords?
Owning any property in Australia can be a huge advantage in 2024 and for the foreseeable future. Owning a dual occupancy home and letting both properties out to tenants, however, can be quite lucrative.
Although nothing is guaranteed or certain (except death and taxes, as the saying goes), a dual occupancy home is generally a reasonable investment that can yield great returns for many years to come.
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