A new report from the ACOSS/UNSW Sydney Poverty and Inequality Partnership shows that regional rents are now 18% higher than 2 years ago, at the start of the COVID 19 pandemic. Given that wages have only risen by 6%, the report concludes that regional rental housing affordability has significantly worsened during the public health crisis.
Every Australian capital city and regional area has seen rent rises during this crisis period far in excess of wage increases or CPI-linked payment adjustment, with the exception of Sydney and Melbourne.
State-level figures show that the situation for regional renters in Tasmania and Western Australia is particularly difficult because of even larger housing cost increases.
The report, COVID 19: Housing market impacts and housing policy responses – an international review compared the experiences of Australia and seven other case study countries – Canada, Germany, Ireland, New Zealand, Spain, the UK and the US. It found that all followed similar paths in the early stages of the COVID-19 pandemic by providing emergency income support, along with more direct housing and homelessness interventions.
These temporary actions helped to avoid the housing market disorder, mass insecurity and homelessness which were widely anticipated everywhere at the start of the crisis and meant that vulnerable tenants and homeless people were protected.
However, once the initial moratoriums on rent increases and evictions were lifted, the report also shows that nearly all the countries reviewed experienced rapidly accelerating rent inflation – at rates higher than anything experienced over the previous decade. In Australia, the UK and US, 2021 rent inflation reached levels unseen since the 2008 Global Financial Crisis or GFC.
The report highlights that, with house prices also having risen sharply during the crisis in most of the researched countries, housing affordability pressures are now generally even more acute in 2022 than when COVID first hit. And this after a decade when Australia, like most of the other countries covered, had already seen intensifying rental housing stress.
According to ACOSS CEO, Dr Cassandra Goldie:
“Soaring regional rents are compounding financial stress for many people on low incomes or receiving income support payments. Regional rents are rising at rates far above the national average yet are only indexed to capital city rents. This means regional renters on social security will be facing cost of living hikes well above their CPI-linked benefit increase.
“With private rentals already in short supply before the recent devastating floods, soaring rents, and a severe shortage of social housing options, we’re in the middle of a renting crisis in many parts of regional Australia. In flood-affected areas, it’s clear the rental market cannot house the families on low and middle incomes who have been made homeless temporarily – the real concern is that this then becomes permanent.
“We need immediate Federal Government action to help house people made homeless in flood-affected communities. But COVID and the floods are only aggravating a national rental problem that has been building for years. After a decade of Commonwealth neglect on social housing we badly need a major national building program that starts to remedy this, with a sizeable part of the investment going to the regional centres facing the greatest stress.”
Report lead author Professor Hal Pawson said:
“Just as in most other countries in our study, Australia’s emergency income protection and also housing policy measures triggered by the pandemic went well beyond what anyone would have previously imagined. Just for a brief moment we had a tantalising glimpse of cities with street homelessness greatly reduced and a rental housing market where evictions were drastically cut. But since the experience has prompted virtually no permanent reforms of social security or rental housing regulation, governments appear to have resisted learning lessons from the episode.”
Emma Greenhalgh, Chief Executive Officer of National Shelter, said:
“This report demonstrates the missed opportunities of the past two years to capitalise on the initial positive responses by governments to address housing and homelessness issues during COVID, and create a housing legacy from the pandemic by investing in social and affordable housing. We are in a national housing emergency that has been a long time in the making, compounded by COVID and climate disasters. There is a lack of urgency by the Federal Government to this crisis. The development of a national housing strategy to respond to this crisis is critical.”
Mission Australia CEO Sharon Callister said:
“This report confirms that, just like other countries, it has never been so difficult to find an affordable home to rent in Australia – particularly in our regional areas. The end of the temporary increases to income support and the rapidly increasing affordability pressures are putting people at greater risk of homelessness. We continue to see people in low-paid, insecure and casual work living precariously and unable to afford the basic necessities, especially housing.
“Mission Australia calls on the Federal Government to lead a national plan to end homelessness. We urgently need to move Australia onto a credible path to end homelessness and provide everyone with a safe and affordable home through significant investment in social and affordable housing.”
Read the full report at: https://bit.ly/3qcpk97
Find out more about the poverty and inequality partnership at http://povertyandinequality.acoss.org.au
- By late 2021, rents were at historically high rates in Australia, the UK, Canada, Ireland, New Zealand and the US.
- Between early 2020 & late 2021, house prices rose in all 8 countries researched for this report – Australia, Canada, Germany, Ireland, New Zealand, the UK and the US.
- There has been no price decline since COVID struck, unlike the GFCwhich triggered major and prolonged downturns in Ireland, Spain and the US.
- By Q3 2021, annual nominal house price inflation had reached 22% in Australia and New Zealand, 18% in Canada and USA, 12% in the UK and 11% in Ireland.
- By end 2021, annual rental increases were higher than 8% in Australia, the UK, Ireland, New Zealand and the US – in most of these countries the fastest rate of rent inflation since 2008.
- In 5 out of the 6 countries covered in this report for which national statistics are available, nominal rent increases exceeded wage increases in the 2-year period to late 2021, therefore damaging rental affordability.
- In 2020 and 2021, property prices and rents increased faster for detached houses than for apartments, and for regional rather than urban areas, probably reflecting the rapid rise of remote work that enables workers to move away from urban areas.
- The other 2 countries researched for this report saw different outcomes. In Germany, house prices were similar to pre-pandemic, while in Spain price growth remained subdued. Similarly, the rental market in Germany was relatively unaffected by the pandemic, while in Spain rents continued to decline in nominal terms.
- This is because Germany has an unusually resilient economic and housing system due to conservative mortgage lending and a strong social safety net. In Spain, however, the housing and rental market suffered from heavy damage sustained by the dominant tourism industry
- All 8 countries researched took far-reaching measures to maintain incomes and economies during the first 2 years of the pandemic, including through increased social security, introducing new temporary assistance payments, through furlough or wage subsidies, and financial sector support from major banks.
- Most of the countries researched also took measures to safeguard housing systems & prevent homelessness, such as deferred mortgage payments, rental eviction moratoriums and emergency accommodation for people experiencing homelessness.
- Some countries such as Australia and the UK offered direct government-funded housing market stimulus, which was misdirected as this compounded record low interest rates in inflating demand, meaning that many people were locked out by resulting house price inflation,
SOURCE: Domain.com.au, specially commissioned analysis