Senin, 29 April 2013

The rent is too damn high - but why?

Keen followers of rental related reporting will have noticed some pretty dire headlines over the last couple of days. The ABC screams "Mission impossible for low income renters", the Sydney Morning Herald yells "Poor priced out of Sydney rental market", while The Australian exclaims "Dearth of housing for the poor".

Why is my rent going up again?

Some regional papers have jumped in, too, with reports from Broken Hill, GoulburnAlbury, YassPort Macquarie and Newcastle that high rents have made headlines locally.

The Daily Telegraph offers a slightly more subdued "Anglicare rental affordability report shows welfare recipient struggle to find housing", which gives us a clue as to what all this is about - Anglicare Australia has just released it's Rental Affordability Snapshot for 2013. The news is not good.

We wont go into the headline findings - they've been covered pretty well by the papers. Suffice to say that if you're on a low income - like a Centrelink payment, or a wage from a part-time job - your chances of finding something decent to rent in the private rental market are pretty slim. Well, almost non-existent, actually. This is not just in Sydney, it's across New South Wales, and it's across the country.

For keen followers of rental related reporting this should come as no great surprise, even if it does fly a little in the face of current reporting conventions. We already know the rent is too damn high. It's kind of nice to think that others are getting this message - at least for a day or two - thanks to the work of Anglicare Australia. But it's a shame that the conversation tends to stop there. Who is asking the next question: why is the rent so high? And what happens to those of us who can't afford it?

As it happens, we were in attendance at the recent Shelter NSW conference "Hot Topics in Housing Policy", where one Emilio Ferrer of Sphere delivered a presentation called "The Private Rental Market - Affordability and Homelessness". Ferrer observes a correlation between rising rates of people seeking to access homelessness services, and rising rents in the private rental market. He says that these rises are not the product of economic indicators such as GDP, unemployment or wage growth. Nor are they the result of a decline in the availability of social housing properties. Instead, he says, they are the result of chronic underinvestment in housing supply by the private sector, which has resulted in a consistently low vacancy rate over several years.

"The effect of this on tenants," he suggests, "is that it's a landlord's market. Some tenants are priced out of the market, and some tenants are selected out of the market". By this he means that it becomes easier for landlords to pick and choose tenants, because when vacancies are low, competition is high, and the pool of applicants for an affordable property will be much larger. Applications from those with lower incomes will be some of the first to hit the culling room floor.

You can find the slides from Ferrer's presentation (as well as others from the conference) here. We think he's pretty much on the money. As we've alluded to before, current policies that are said to encourage private investment in rental housing just aren't producing enough new stock. According to Ferrer's data, it doesn't even come close - in order to get back on track we'd need to build about twice the number of new dwellings than were built in 2011/12, every year, for the next twelve years.

But there's something else to consider here. Not every tenant who finds their options limited by what they can afford ends up homeless. As we said in this previous post:
In the real world, of course, people do consider the affordability of housing when they decide whether to leave the parental home, or the share house, and form a household of their own, and demand some housing – owner-occupied or rented – of their own. And some of those already out there in the housing market might look again at its affordability, and decide to withdraw, back to the spare rooms of parents and friends.
It's a curious balance. The answer is not just to "build more homes", but to build more homes that people can afford. This will call for a range of policy solutions - indeed, we should be looking at an entire national housing strategy - and as Anglicare's Andrew Yule has said following the release of the Rental Affordability Snapshot yesterday: let's not let this fall off the agenda.