Home owners or forever renters – has Australia’s housing market turned a corner?

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TRANSCRIPT
The dream of owning a home seems to be becoming just that – a dream.
“We’re moving to a nation where there are many young people who will rent for life.”
That is Professor Emma Barker, lead researcher from Australian Housing and Urban Research Institute (AHURI) of the University of Adelaide.
She says housing in Australia is facing a profound change.
“This tipping point where we were once a nation of homeowners and everyone assumed that they would rent for a bit after they left home and then move into mortgage and own their own home. We’ve just really shifted to being a nation where there’s people with mortgages and there’s people who are renters and then there are outright homeowners. So we’ve kind of flipped over from being a home-owning nation to a renting nation. ”
New data released by the Institute after a survey of more than 22,000 families revealed that half of the rent increases in the last 12 months were of more than 10 per cent, and one in six was more than 25 per cent.
Meanwhile, the report found that 78 per cent of renters still want to buy a home, but 59 per cent think they never will.
Among the reasons is that the rent increases made it difficult for people to save enough money to put down an initial deposit on a house.
Professor Barker again.
“Everyone acknowledges that kind of ‘deposit gap’ is a real problem for people to get into home ownership. So people in some of the larger cities are finding it increasingly difficult to just get a deposit to enter home ownership. Some renters though, are being quite strategic in the nation and they’re buying a house in a place where they can afford to buy a house and renting where the work is. So we call them rent-vestors, and that shows that kind of young renters are being quite strategic in the way that they’re moving around the housing market. ”
But while this might be one way to deflect the problem, it still doesn’t solve it.
Kelly Ryan, CEO of the Real Estate Institute Victoria, says one way to ease the issue is to adopt long-term leases.
“Commercial rental leases are usually for five-plus years. So what comes with that is a higher increase of expectation on the way that the tenant looks after the property. So they have more responsibility for some of the maintenance across that period of time. And on the flip side, the rental provider obviously gets the certainty of longer term rentals. What we’d also like to see is rental providers incentivised for keeping their properties in the long-term rental market. So receiving land tax rebates for the longer they hold their property in the rental market, just to try and help make sure we continually have a significant supply of rental properties in the market to accommodate the needs.”
Currently, rental terms in Australia average between six and 12 months.
Professor Barker explains that longer leases can also help bringing a sense of home to those who still dream of owning a property.
“I think people want the option to be able to lay down roots. And that I suppose, is what your home tends to give you. If you’ve got a lease length that you have a bit more security and length to, it means that you can  enrol your children in the local primary school and know that you’re always going to be living in the zone or take a job or even do things to the house that improve it.”
Even so, Amanda Rishworth, Minister for Social Services of Australia, says new policies need to consider the wishes of Australians.
“We want to see people have home ownership as an aspiration if that’s what they want. And that’s why our focus when it comes to housing is about putting more supply, building more homes, because ultimately building more homes means there’s more homes to build, more homes to rent and more homes to own. So it is something that we are very much focused on.”
Either way, Professor Barker says recognising this new era of the housing market is the first step in addressing Australia’s shift to a nation of renters.
“I think it’s something that has happened and I don’t think it’s necessarily a bad thing. I think that once we acknowledge that Australia is more a nation of renters, then we can begin to kind of formulate policies and approaches and ways of dealing with home ownership that acknowledge that there are renters as well. So it might mean that we begin to look at the quality of life in rental, because there’s not really a reason why it shouldn’t be as good as home ownership.”
And this does not necessarily mean a failure to the nation.
Ms Ryan says there are other ways of measuring success.
“Australia was once really known for home ownership being  the (pinnacle) of financial success. But I think we’re all having to starting to realise that maybe there’s other ways we can quantify success in the housing market.”