Long-term renters pushed out of the housing market by record rent and house prices

 In Home News Section, Uncategorized

Kate Smith and her husband will never make any more money than they do now but already their dream of owning a home is beyond reach.

The 35-year-old teacher lives in Sydney’s south-west and has been saving to buy a property for four years — ever since she moved out of her family’s home.

Both her and her husband save 10 per cent of their pay cheque towards a deposit, yet they are still nowhere near close — even with a home loan.

“We have decent jobs but we’ve both hit the top of our pay scale so we’re never going to earn any more than we are now,” she said.

“It’s almost made it impossible with house prices as they are.

“There’s no way to save that kind of money while you’re paying $620 a week in rent.”

Even with a combined income of $160,000, the couple are facing increasing financial strain as their rent went up by $100 a week in July.

Moving further out wasn’t an option, so they had to stay put.

“We did a bit of research and it was going to be too hard to find somewhere else to live that wasn’t already at that kind of money,” Ms Smith said.

“We can’t really move any further south to where it’s cheaper — and it’s not much cheaper further south anyway — because of where my husband works.

“It just means my generation is facing the possibility of never owning their own home.”

COVID-19 pandemic drives up rent to record highs

Rising rent and house prices are “a double whammy” for people trying to save for a deposit, CoreLogic’s Head of Research Australia Eliza Owen says.

She says the solution lies in affordable and stable rental conditions.

“I think we often get caught up in this focus of home ownership when for some people, unfortunately, that’s just not going to happen,” Ms Owen says.

“We need to cater for those situations as well.

“Remember that there are people who may never own a home, just because they don’t have a high enough income, they’re relying on the rental market for their housing.”

It’s never been this expensive to rent in Australia since 2008.

In the past 10 years, rental prices have increased by an average 1.8 per cent annually.

This year it was 8.2 per cent.

The ACT tops the list as the most expensive state or territory to rent — the median weekly rent is $570.

Victoria and South Australia are tied as the least expensive at $400 a week.

But in the Northern Territory, renters have had to deal with a staggering 16.7 per cent increase in their payments this year as the median rental spiked to $520.

[GRAPH – rental rates increase]

Ms Owen says rental prices aren’t going up as fast now because people can’t afford them.

Prices initially went up due to the lack of demand — before the pandemic, migrants made up most of the renting population, particularly in Sydney and Melbourne.

They remained high as people needed more space to work from home so they moved out, either of the city or from share houses into their own place.

“People just can’t keep paying that much,” she says.

But Chris Joynes, who lives in Glen Iris in Victoria, isn’t convinced the trend will help him own a home in coming years.

Mr Joynes has been renting since 2009 and struggles to see a way out of it even though the lifestyle isn’t ideal for his young family.

“Renting has affected my ability to save and the stability of the family as well,” he says.

“The quality of the houses you get as a renter is inadequate — sometimes there are drafts, poor insulation or cracks in the windows.”

But poor housing standards are only one of the community support worker’s many concerns when it comes to renting.

“You don’t know whether your lease will be renewed,” Mr Joynes says.

“You’ve got to enrol your daughter in primary school, and you don’t even know whether you’ll be able to stay in the area.”

Like Ms Smith’s experience, rising house prices have pushed his options further and further out into the region.

And despite being offered better bank loan rates for those newer estates, he could not picture a life away from his family’s support system and one that involves long daily commutes to work.

Being essential workers, both Mr Joynes and his wife, who works as a teacher, count on childcare support from their parents to help raise their five-year-old daughter.

Moving out to a regional area could mean a major career change and new childcare and education arrangements.

The stress of it all has brought his housing plans to a standstill.

House prices climb twice as fast as rent

But house prices in regional areas are going up quicker than in the cities.

Although prices dipped slightly in the middle of the year, they rose by $86,373 in the previous 12 months.

That means regional house prices were going up about $236 a day.

The median house price in regional New South Wales is $615,005, which is more than half of what it costs to buy in Sydney and is more than most capital cities.

[GRAPH – house prices capital city vs regional]

“When you’ve got that added demand coming from the city, and people not leaving regional Australia, you get less listings popping up for rent and for sale,” Ms Owen says.

“That puts additional supply pressure on the regional housing markets.”

But for those who can afford to buy a home in the regions, moving there may not be feasible.

Mr Joynes says there is a mismatch between the demand and supply, especially with jobs and infrastructure.

“We’re unsure about our job situation further out because there’s not a lot of services that we could possibly work out [in the new estates] and public transport is limited as well,” he says.

His experience has spurred him to take up part-time study in urban planning as he wishes to see change in housing options for families, while expanding his job options in remote areas.

“There’s no kind of forever home that we’re looking forward to,” Mr Joynes says.

“We’ll just probably move from rental to rental so we can keep the jobs we like, stay close to the family, in the leafy neighborhood here [that offers] great amenities like being a 30-minute train ride away from the CBD.”

Ms Owen says it will probably take longer for people to pay to get into the housing market.

House prices in NSW, Tasmania, the NT and ACT shot up by over 20 per cent in the past year — surpassing the nation’s 18.4 per cent average.

House prices also went up twice as fast as rent.

[GRAPH – house and rent prices comparison]

Even Victoria, which had the slowest growth, saw house prices rise a whopping 14 per cent, according to CoreLogic’s 2021 September Quarter figures.

Territorians — who had been in a five-year price slump — saw the median housing price jump by $100,000 in a year.

But as states and territories emerge from lockdowns, Ms Owen says the economy is on its way to recovery.

More people have found work again and have large savings from lockdowns and government support payments.

However, quick economic recovery proves to be a double-edged sword as house prices have increased drastically for the same reason.

(Original ABC Article)