Rentals Brittle, Under Pressure

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Last week the Australian Housing and Urban Research Institute (AHURI) held a seminar in Melbourne on the serious stresses on renter households that have emerged over the last twenty years.

Dr Wendy Stone from Swinburne found:

• A decline in overall private rental affordability: median rent to median income ratio changed from 19% in 1981 to 26.9% in 2011;

• Heightened rates of residential mobility among private rental tenants relative to all tenures: 39.5% private tenants moved 3 or more times in previous 5 years compared with 7.8 % among other tenures;

• ‘Forced housing moves’ including evictions & affordability accounted for 22.6% of these PRS moves.

And offered this telling profile of renter numbers:

AHURI renter numbers 600pixels

This suggests government ought to reform landlord/tenant laws to improve the circumstances of low income renters, currently being shifted along and along.

The emergence of a large class of single women raising children in the private rental market with remarkably insecure tenancies is a sociological time bomb. Australia risks creating multi-generational poverty clusters; particularly as we are also grossly under-funding government schools.

The AHURI analysis looks only at tenant insecurity.

The circumstances of the ‘little landlords’ seeking to profit from renting to the poor are equally flimsy.

The 1.8 million renters are housed by 1.5 million Negative Gearers. The ’Gearers are overwhelmingly middle income earners with a single rental property each, subsidising their ‘investment’ from wages. Recent big interest rate cuts have reduced their negative cash flows, but the towering debt remains intact. The complete absence of capital gains since around 2010 and little prospect of future gains makes the ‘Gearer strategy of converting current income into capital an impossible dream.

An excellent analysis by Philip Soos of the deep flaws in negative gearing can be found here.

If government were to improve tenant security at the expense of the little landlords, they risk undermining the very poor financial foundations of the entire private rental market. So far, the interests of investors have prevailed. A permanent underclass of poverty and dependence is therefore a certainty. Sigh.

1 Comment

  1. THEO06-08-2013

    More evidence on the failure and incompetence of institutional government to look out for the majority of Australians and politicians have the audacity to claim they are still worth voting for.

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