Is the housing shortage good or bad news for small-to-medium-sized (SME) businesses in Australia?
A recent report predicts housing supply will hit a decade low by 2026, meaning fewer homes to own or rent. This shortage comes as Australia expects up to 190,000 permanent migrants this year.
It looks like a perfect storm.
How the housing shortage could impact your SME:
Finding and retaining talent: If current and prospective employees struggle to find affordable housing within commuting distance of your premises, they may seek opportunities elsewhere. This can create hurdles in recruitment and staff retention.
Rising business rental costs: As the cost of living increases, so will rental prices for your business premises, potentially adding to your business expenses.
Employee stress and productivity: The search for a home can be stressful, impacting morale and productivity. The State of the Nation’s Housing 2022-23 report estimates 377,600 households are in housing need, spending over 10 hours a week worrying about housing stability. Expect that to hit productivity and discretionary income.
Slowdown in the property industry and potential recession: A slowdown in the property sector could ripple through associated sectors such as financial services, potentially tipping the economy into recession, particularly if business confidence shrinks.
To help protect your business, try these tips:
- Offer relocation assistance for new hires.
- Provide flexible work options, like hybrid or remote work.
- Keep salaries and benefits competitive despite the housing market
Labour shortage: A key factor
A lack of sufficient skilled construction workers is a major contributor to the housing shortage and hinders plans to build more homes. Inflation further complicates the issue by driving up the cost of building materials.
The National Housing Supply and Affordability Council emphasises the need for:
- Planning reform
- A more productive residential construction sector
- More vacant lots released for building, and
- Removal of barriers to institutional investment in housing.
Michael Yardney predicts a prolonged housing shortage will drive up house prices and rents. For SMEs with property, this means potential gains in property value and financial stability. Those without property will face higher competition and prices. Commercial property owners can benefit as their spaces become more attractive. Rising property values will increase rental costs, impacting leasing SMEs’ budgets. Location matters: commercial rents in Sydney are up to 80% higher than in Melbourne and southeast Queensland, according to Atlas Economics.
Do I need to increase my insurance?
Whatever your situation, it’s crucial to ensure your property insurance – building, contents and/or landlord – reflects the replacement value, including costs for compliance with current building codes.
If you would like to know more about Australia’s houseing shortage and how it might affect your business please CLICK HERE, or contact us for more information.