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Rental housing scarcity, soaring inflation, and consecutive interest rate hikes have had a detrimental impact on housing affordability, a Senate inquiry has heard.
Titled ‘The Worsening Rental Crisis in Australia’, the inquiry, conducted by the community affairs references committee, embarked on its first public hearing on 23 August 2023.
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The inquiry came as rental affordability has hit its highest level since June 2014, with 30.8 per cent of income required to service a new lease nationally, for a median income household, according to ANZ CoreLogic Housing Affordability Report.
The session brought forward voices from tenant and landlord associations, university researchers, and the Real Estate Institute of Queensland, which highlighted the impact of rising rents on households and factors affecting supply and demand in the rental market.
Margaret Kohlhagen, president of the Landlords Association of South Australia, told the inquiry she had “never seen as many problems” in the rental market in the past 20 years, as she has today.
“I’m not seeing the support from the government. All I’m seeing now is more and more changes coming in, which is only going to cause more and more landlords to exit,” Ms Kohlhagen said.
“Landlords want long-term tenants.”
While the government has introduced a package of reforms including “A Better Deal for Renters”, aimed at safeguarding renters’ interests, these reforms have already been incorporated into the laws of the majority of states and territories.
In their submission the association outlined the legitimate expenses that property owners bear, encompassing repair costs, state and local government charges, insurance, and interest payments for mortgaged properties.
However, it argued that negating deductions for these expenses, supposedly in pursuit of equity, disregards the substantial financial contributions that landlords make to local and state governments.
Furthermore, they drew attention to the distinct deductions available to wage and salary earners through the superannuation system, which are often inaccessible to property investors.
Amid soaring rents, the committee probed the Real Estate Institute of Queensland (REIQ) about whether landlords preferred increasing rents over decreasing.
Indeed, ANZ-CoreLogic’s report showed national rents have surged by 27.4 per cent since the onset of the COVID-19 pandemic, resulting in a $127 weekly increase in the median dwelling rent across Australia.
Chief executive Antonia Mercorella acknowledged the immense stress that tenants have endured over the past three years.
She also highlighted an alarming rise in depression levels within the property management sector, leading to an uptick in resignations and stress-related claims.
She said the industry had “never seen the levels of depression among the property management sector” as is today.
Ms Mercorella expressed a preference for vacancy rates to hover between 2.6 per cent and 3.5 per cent to maintain a healthy balance in the market, as compared to record lows of the current 1.1 per cent.
“We don’t enjoy vacancy rates being as tight. It becomes a very stressful time for renters and the kinds of behaviours that bring out is problematic,” Ms Mercorella said.
Ms Mercorella emphasised that this scarcity has paved the way for competitive practices, even though rental bidding is prohibited in Queensland.
“What we have seen in order to secure property is they have been offering more, which has been driving up prices,” Ms Mercorella said.
“What’s also happening as a result of the market being so competitive, is tenants are staying put for much longer, which is not necessarily a bad thing I might add, but again it’s creating a very different market.”
She added the influx of people from interstate was also a significant factor pushing prices higher.
The Housing Industry Association (HIA) has reiterated the need for supply in their submission stating that “in order to put downward pressure on rental prices households must be given greater housing choice”.
In their submission, they stressed that a vacancy rate of around 5 per cent was deemed optimal, as it engenders a balance between landlords seeking tenants and renters seeking accommodation.
HIA asserted that this equilibrium leads property owners to adjust rental prices or enhance dwelling quality to attract tenants, ultimately fostering a healthy rental market.
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