There’s a lot I’m grateful for, and I’m determined to end the year on a positive note. But when Santa did his rounds earlier this week, he wasn’t the only thing to shoot through the roof.
My flatmate and I have been lucky to get a decent deal on our place, but that’s probably more a reflection of the blocked plumbing than our negotiating skills. That is, until Christmas, when our luck ran dry – unlike our shower floor. We must have ended up on the naughty list because from February, our rent will jump by about 35 per cent.
Illustration by Simon LetchCredit:
Receiving the news almost felt normal – like the fate that had met many of our friends had finally caught up to us. Advertised unit rents increased nearly 24 per cent across Australia’s capital cities in the 12 months to September alone.
If that isn’t enough to suggest there’s a huge housing affordability problem, it’s worth remembering wage growth, at 4 per cent in the 12 months to September, has not kept up.
The rent hike on our waterlogged apartment means more than 40 per cent of my after-tax pay will be eaten up by rent. Keep in mind you’re considered to be in housing stress once housing costs exceed 30 per cent of your total income.
My flatmate and I have looked around at other options. Moving to the North Pole and becoming elves is looking increasingly attractive. In all seriousness, our prospects look grim. Rental vacancies for residential properties across Australia were at about 1 per cent in November and every weekend lines of renters snake around potential rentals across the country.
Ever-increasing competition for rare rental properties is forcing rents ever higher.Credit: Peter Rae
Moving back in with parents is an option, but in my case the Perth-to-Sydney flight would make for quite the daily commute. It might still be easier than driving through the Rozelle Interchange, though.
Even if we blow our competition out of the water with our demonstrated experience in creative drainage solutions and secure another apartment, there are reasons to stick where we are: moving costs and perhaps most importantly, our links to the local community.
When I moved to Sydney last year, one thing that helped me to settle into my new home was joining the local soccer team. Across two seasons, I made great friends and started to feel more at home.
Now, with rents in our suburb on the rise it looks like we’ll be pushed outside it. Housing market pressures could be leading to lonelier and more disconnected young Australians, with renters struggling to put down roots. Perhaps this is why the days of friendships in the local neighbourhood are seemingly gone.
There’s also little hope of avoiding the rental market altogether.
Unless we cause enough trouble next year that Santa gives us a large coal mine, a house is firmly off the cards. Our combined income gives us borrowing power of about $400,000: far short of the roughly $620,000 average unit price across Australia’s capital cities.
With so much of our income going towards rent and much of the remainder evaporating into other necessities, even saving for a deposit feels fanciful. At this rate, all the coal mines will be long retired before we escape the rent cycle.
It’s difficult not to conclude that, somewhere along the way, our country has lost sight of our spirit of giving everyone a “fair go”.
Many young people are losing hope of ever buying a house – and struggling to pay for day-to-day necessities – while Aussies who already have wealth in the form of a home or investment properties benefit from capital gains and rising rents.
Many property owners have worked hard to get where they are. Yet, it’s also true that their fortunes are a function of decades of decisions which have stymied – or, at best, failed to adequately address the shortage in – housing supply.
Zoning laws which restrict and delay the construction of new dwellings remain in place across much of the country. Efforts by federal and state governments to accelerate development have yet to deliver and even then, their targets fall short of what many believe is required. Moves to replace stamp duty with land tax for new homebuyers, which would make the allocation of housing more efficient, have been pushed back.
Negative gearing – where investors can cut their taxes if their rental income doesn’t pay the mortgage on that property – should be limited to new properties. This would help ensure the policy increases housing supply but discourages well-off Australians from gobbling up too many existing properties.
Reportedly, 1 per cent of Australian taxpayers own nearly a quarter of the country’s property investments and investment properties are about 30 per cent of Australia’s roughly 11 million private residential dwellings.
An inadequate increase in housing supply has allowed investors to squeeze out new homebuyers from homeownership, putting upward pressure on house prices as well as the rental market. And those without financial help or wealth transfer from their parents are finding it increasingly difficult to break into homeownership.
Until we accept there is a problem, some of the most vulnerable groups in our society will struggle. If we really care about giving everyone a “fair go” in Australia, there needs to be more courageous policymaking and less resistance – if not a greater push – to increase housing supply and density.
Young Australians, who have had little to no say in the policies that have led us to the housing shortage we now face, should not be left alone to suffer the consequences.
I don’t need a house handed to me. But I would like a fair go for my generation to strive for the Australian dream. At the very least, I’d like to live without the constant threat of rent hikes pushing us into financial stress and to hope that when Santa comes down our chimney next year, so will our rent.
Millie Muroi is a Herald business reporter.
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