The real reasons for Australia's housing crisis

Then there is land tax on rental properties, - another money grab.  Suffice it to say that land tax (like most other imposts on landlords) eventually gets passed on to tenants.  It is not a coincidence that the ACT, which has the most savage land tax - up to 1.4 per cent of residential land value and no tax free threshold - also has the country's highest rents.  Queensland recently(unsuccessfully) sought to tax landlords based on their total Australian land holdings, not just those owned in Queensland.  The measure got shelved because other state governments refused to cooperate.  Many state governments have increased land tax rates for investors, with larger increases for overseas investors and investors leaving properties vacant.

State governments, especially those of the "progressive" variety, have also made life difficult for property investors in a number of other ways.

Arguably the balance of tenancy laws has been shifted unreasonably in favour of tenant protection, despite bad tenants often costing landlords large amounts of money.  In particular, it has become increasingly difficult and time consuming for landlords to remove bad tenants (e.g. those who don't pay their rent, damage the property, engage in anti-social behaviour).  A number of jurisdictions have moved to also force landlords to accept pets (potential damage by dogs being the big issue).

Landlords value long term tenants and don't like the expense and vacancy associated with tenant turnover.  Consequently they don't generally seek to needlessly remove good tenants.

Changes to income tax law have also penalised landlords.  From 1 July 2017 property investors could no longer claimtravel expenses incurred while inspecting, maintaining or collecting rent from rental properties.  While this might be defensible in the case of some routine matters, it even prevented landlords affected by recent floods from claiming travel expenses, when major damage affected their properties.  From 1 July 2017, new rulesalso abolished deductions for second-hand depreciating assets in residential rental property, so that landlords now generally cannot claim a deduction for what is a real and genuine cost.

Successive state and territory governments of all varieties have also failed to rein-in stamp duty charges on property transfers (except in the case of concessions for first home buyers).  Penal rates of stamp duty are a deterrent to potential landlords and potential owner-occupiers alike.  The problem has been a near complete failure over decades to index stamp duty tax thresholds for inflation.  A look at existing thresholds (e.g. for NSW) shows the first three stamp duty thresholds for properties to be $14,000, $32,000 and $85,000 (what can you buy at such prices these days?), while most houses now attract stamp duty rates of 4.5 to 5.5 per cent. 

The by-product of all these changes is that it has become a lot more expensive and a lot less desirable for people to invest in real estate.

There has been a steady increase in investors selling their properties since 2014, and a significant drop in new investors entering the market.  This has reduced the supply of rentals.  The pandemic worsened these shortages as people relocated out of capital cities and took on second homes.  By making it more expensive for investors to hold residential property, governments have reduced the supply of rental stock.  Instead landlords are leaving the rental market in favour of investing in shares or superannuation, which are more favourably treated in income taxation, exempt from stamp duty, are less book-keeping intensive, and are low care investments.

Landlords generally are fed up with being demonised by begrudgers (people who resent others that have achieved wealth or success).  Fingers are commonly pointed at so-called wealthy landlords, "money hungry" developers, selfish baby boomers etc.  Some even try to manufacture a battle between landlords and tenants in order to justify policies like rent control that have never worked.  (Nobody ever suggests assistance for landlords, when rents are low or falling, or when interest and other costs are skyrocketing.)

The reality is that the Mum and Dad landlords with one or a handful of properties, who dominate the landlord class, are mostly thrifty people.  They saved more of their lifetime earnings and bought investment property, while their contemporaries spent nearly all of theirs on a more lavish lifestyle, including new cars and overseas holidays.

Investors in housing are not stupid.  If governments make life too hard for them, they will go elsewhere with their money, and are increasingly doing so.  If fewer people want to be landlords, it is unlikely that state and territory governments (given already high and rising public debt levels) will be able to make up the difference by building more public housing.

Watch out for further rent rises, and feel sorry for those that don't own their own residence.