Rabu, 10 Oktober 2012

Reporting rent reports

It's been ages since we've discussed reports of rent increases in the private market. For a time – particularly in the couple of years leading up to the GFC – this was a hot topic in the media, and every quarter the TU would take inquiries from journalists with the latest rents data from APM or Housing NSW's Rent and Sales Report in hand (opened at the table of median rents by local government area, with the highest figures circled for attention).
 

Since then, things have been quieter, and in a way we've enjoyed the break. Not because unaffordable rental housing isn't a problem – we say it's our most critical housing problem – but because of the way alarming reportage of rent increases may encourage the very thing it professes to be alarmed about. As I indicated, the reporting usually leads with the highest figures at hand, and the more nuanced details tend to get buried, with the result that at least a few landlords get a rush of blood to the head and send out notices of large and unrealistic rent increases.

Today, rent increases are being reported again, under the headlines

Sydney house rents hit record high

and

Record in high house rents could force families into flats

so it's important to try to keep some of the details in mind.

First, rents data being reported is from APM, and as such it refers to 'asking rents' – that is, the rents that are being touted for in the on-line advertisements that APM uses as the source of its data. What a landlord asks for in an ad may be quite different from what they actually end up getting when the property is let. (When we crunched the numbers – a few years ago now – we found that what they were getting was $45-50 per week less).

So what's reported today is that the median asking rent for Sydney houses in the quarter ending September was $520 per week. Whether landlords actually got this amount is another matter.

Looking at the data for what landlords actually got for new tenancies, you'll find that the way it is presented doesn't exactly match up (the Rent and Sales Report is a quarter behind, and doesn't give a median for all Sydney houses), but you can see that the median rent for two-bedroom Sydney houses was $375 per week, and for three-bedroom Sydney houses it was $420 per week.

Secondly, when looking at the Rent and Sales data keep in mind that these relate to new tenancies, and there's good reason for supposing that these rent will be higher than those paid by tenants in existing tenancies (ie the property is more likely to be newly repaired or renovated, and an existing tenant who is a known good payer will usually get a bit of a discount over a new tenant of unknown quality).

Thirdly, critically consider the analysis. For example:

First home buyers were putting off buying and instead turning to the rental market, the Australian Property Monitors economist Andrew Wilson said. ''That means there's more demand … and that's one of the factors that has driven up house rents,'' he said.

Turning to the rental market? Most of them would already be in it. There's a bit more to the changing shape of the rental market than that.

None of these qualifications changes the fact that for lower-income households in particular, the rent is just too damn high. When almost two-thirds of lower-income renter households are in housing stress – about a quarter of the whole rental market – we've got a problem. The thing is to engage the problem-solving capacities of policy makers, rather than the greed-impulse of so many landlords.