50,000 investors in mortgage stress put their tenants in precarious position

50,000 investors in mortgage stress put their tenants in precarious position
50,000 investors in mortgage stress put their tenants in precarious position

There are 50,000 households that face high housing cost burdens themselves, following the pandemic, who also own a private investment property.

There are 956,000 households living in housing affordability Stress (HAS) in Australia, according to a new AHURI report that looked into the impact of COVID-19, with Commonwealth rent assistance (CRA) reducing the number to 758,000.

The situation of the 50,000 was "cause for concern given that private renters have been disproportionately affected by the downturn," the report noted after modelling from the University of Adelaide and Curtin University.

There is considerable potential for highly leveraged households owning an investment property, who are spending a higher proportion of their incomes on their own housing costs, to run into trouble meeting those costs and/or the servicing of their investment loan commitments, it noted.

"We estimate that there are around 37,500 mortgage home owners living in HAS who also own an investment property, and approximately 12,000 private renters in a similar position."

It is estimated that the overall number of households living with HAS would have risen to 1,336,000 (from the 758,000 baseline) without the JobKeeper and JobSeeker interventions.

The study found that the number of households living in a precarious situation is very high, and will likely remain high even after a partial recovery in 2021 and the withdrawal of much of the Australian Government’s income support measures.
 
Without an extension of the JobKeeper income support measures beyond March 2021, the number of households living in HAS is likely to increase significantly, the AHURI report concluded.
 
Households living with HAS and owning an investment property themselves are predicted to more than double.
 
The report noted JobKeeper and JobSeeker interventions reduced the incidence of housing a fordability stress by a considerable amount: 861,000 households compared to 1.34 million without the intervention.
 
"As JobKeeper moves through its later phases, the predicted number of households in HAS is expected to gradually rise by a further 124,000; 73 per cent of these households are private renters."
 
 
Tags: 
Ahuri COVID-19

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