A new report has found that the private rental market in Australia is under extreme pressure, with vacancy rates at their lowest levels on record and rents rising sharply.
The report, by the Real Estate Institute of Australia (REIA) and REA Group, found that vacancy rates nationally sit just below 1.5 per cent, with advertised rents rising 6 per cent for houses and 9 per cent for units over the past year.
The report also found that renters in Australia now make up around 30 per cent of households and housing stock. They face a competitive market, applying on average for six rentals before securing a new rental home. Seventy-five per cent of successful applicants feel they have had to compromise on features on their rental.
REIA president Hayden Groves said that rental conditions were at their tightest levels on record, spurred by a change in household formation, a severe undersupply of rental stock, construction industry woes and the return of immigration in the wake of the pandemic.
“There are many factors driving this ‘perfect storm,’ but often the key relationships within a rental transaction are completely overlooked in the broader mega and macro debate: that of renters, property investors and property managers,” he said.
Mr Groves said that with the Greens pushing for a national rent freeze, it was vital for lawmakers to understand who supplied most of Australia’s rental stock.
“An Australian property investor holds a mortgage and comes from a working household,” he said.
“Investors are generally aged 35 to 65 years old, with more 35- to 44-year-olds owning investment properties than 65- to 74-year-olds. Seventy per cent of property investors only own a single investment property. Just under 20 per cent own two investment properties. Less than 10 per cent of all property investors own three or more properties.”
Property investment has grown as an investment class since 1980. Back then, property investors accounted for about 4 per cent of tax filers. Today, they make up 15 per cent of tax filers.
Older renters hit hardest
The report found that older renters are particularly hard hit by the current rental market conditions.
YourLifeChoices research shows that around 16 per cent of Australians over 50 are renters.
“Older renters are more likely to be on low incomes and have less access to financial support,” the report said. “They are also more likely to have health problems and mobility issues, which can make it difficult to find and maintain a suitable rental property.”
The report found that older renters are more likely to live in substandard housing and to experience rent stress. They are also more likely to be evicted from their homes.
“The current rental market conditions are having a significant impact on the lives of older Australians,” the report said. “It is important that policymakers take steps to address the challenges facing older renters.”
Rental affordability is often promoted as an issue that affects younger Australians unable to get into the property market. The truth is, rental affordability affects a significant number of older Australians – particularly those on a fixed income. This was made clear upon the release of Anglicare Australia’s Rental Affordability Snapshot, which found affordability crashed to record lows – meaning renting in Australia has never been less affordable.
“Older people have been left behind by the rental market,” says Anglicare Australia executive director Kasy Chambers.
“We’ve been releasing the Snapshot for 10 years and this is the worst result we’ve ever seen.
“We know why this is happening and we know how to fix it. Every year, Australia’s social housing shortfall gets worse and worse. We have a shortfall of almost 640,000 social homes. Many older people depend on these homes for security as they get older.
“Without action, older people will simply be left to the mercy of the market.”
Older people and homelessness
Rental affordability can lead to older people being left without housing. According to Housing for the Aged Action Group (HAAG), a significant portion of the homeless population in Australia is over 55 years old.
“The numbers of older people living in homelessness within Australia are increasing with 12,246 people in 2006 and 14,851 people in 2011,” states the HAAG.
Australian Bureau of Statistics (ABS) data shows approximately one in seven homeless people (14,851 people) were aged 55 and over on Census night 2011.
Over-55s are even less likely to receive support from specialist homelessness services. According to the HAAG: “People over 55 consist of only 6 per cent of clients accessing specialist homelessness services in 2011–12. This is partly due to the service system design but also indicates that is a lack of beds for older Australians within the homelessness service system (Homelessness Australia 2014).”
How can we keep a roof over the heads of older renters?
There are things that can be done to help older renters, including:
- increasing the supply of affordable rental housing
- providing financial assistance to older renters
- making it easier for older renters to access housing support services
- protecting older renters from unfair rental practices.
The HAAG wants an older persons housing strategy, calling on the federal government to develop a plan for the future housing needs of older Australians, particularly those on low incomes and with low assets.
This would ensure an adequate housing supply for older Australians, provide a range of housing options to suit aged care needs of older people and better regulate the private rental sector to enable older people to sustain long-term tenancies.
There also needs to be a education program and services that “assist older people to make informed decisions about their independent accommodation needs”.
By taking these steps, we can help to ensure that older Australians have access to safe, secure and affordable housing.
What do you think needs to be done to keep a roof over the heads of older renters? Do you agree with the HAAG’s call for an effective housing strategy? Why not share your thoughts and suggestions with our members?