ABC’s 4 Corners program that aired earlier this week shone a spotlight on the rental crisis gripping our nation. In our regional towns and major cities, there are insufficient homes for tenants to live in.
State governments have not built enough social houses to accommodate those in our community that are unable to afford market rents.
Across the housing spectrum, social housing accounts for about 3 percent of all stock. In the 1960’s, it was 7 percent. Meanwhile, state governments raised $23 billion in property-related taxes last year, a combination of land tax and stamp duty. More of these taxes ought to be spent on social housing.
Median rents in Australia are at $539 per week and vacancies are at 1.2 percent. Overall, rents have risen about 10 percent over the past twelve months catching many tenants off-guard, with many struggling to meet these rising costs.
It is worth noting that Perth’s rents, along with Melbourne, remain the cheapest in the nation with tenants parting with 19.8 percent of their average weekly wages on rent.
Rents rise simply due to a lack of supply and an increase in demand. Currently, Perth has only 1675 homes advertised for lease on reiwa.com, 1000 fewer than a year ago. Rising rents is clearly a supply issue.
taxes ought to be spent on social housing
In response to rents rising, tenancy advocates justifiably appeal to governments to intervene in a variety of ways including an increase in social housing and review of tenancy laws. They’re persuasive because they’re getting both. State governments have made changes to tenancy laws to favour tenants and the Feds have pledged to build 30,000 more social houses.
Many of the provisions introduced to tenancy laws in Victoria and Queensland recently seriously erode the rights of the property owner. For example, property owners no longer have the right to end a tenancy upon finalisation of a fixed term lease without giving a legitimate reason such as moving back in themselves.
Other changes included the requirement for property owners to pre-warn tenants if they are intending to sell the property during the lease, allow a tenant to make “reasonable modifications” to the property and keep a pet without the permission of the owner.
Changing tenancy laws in this manner adds further pressure on rental markets because it impacts supply. Why? Because laws that go too far in favouring tenants inevitably erode the rights of property owners, which disincentivises investors, which reduces supply.
Private investors, most of them ‘mum and dad’ types provide about 37 per cent of all housing in Australia. It follows that the less encouragement you give private investors to supply tenantable homes the higher rents will go.
In Victoria, with the pendulum of fairness swinging in favour of tenants at the expense of the people who carry the risk and cost of property ownership, investors turn to alternate vehicles of wealth creation such as shares, managed funds and superannuation. We are already witnessing this change with rental listings in Melbourne down by 30.2 percent in a year.
This week’s decision from the Reserve Bank of Australia to reduce the official cash rate to 3.85 percent during a period of property price growth is likely to sustain the current upward market trajectory. As the cost of borrowings fall, access to funds from buyers previously unable to meet the … Read more
With property listings across the Perth metropolitan area continuing to hover under 5,000 week to week, there’s little doubt that the current ‘sellers’ market’ conditions are likely to prevail for some time. With strong demand for quality homes our most popular method of sale, private treaty, normally attracts multiple offers … Read more