Australians unable to find affordable housing
Interest rate hikes complicate the market
GEELONG, Australia—A line of 50 people snaked in front of a nondescript four-bedroom rental house in Corio, a residential and industrial suburb of the city of Geelong, Victoria. Families hoped to be the first to snag the rental home situated not far from the freeway and a commuter train.
The lack of affordable housing in Australia has hit crisis levels. Monthly rents have increased by hundreds of dollars in the past year even as the country’s vacancy rate reached an all-time low of 1.31 percent in March. On Wednesday, the Reserve Bank of Australia announced its 12th interest rate hike, taking rates to their highest point since 2012. The move is prompting investors to sell rental properties, meaning renters have few options to secure less expensive housing.
The lament of too many people and too few houses echoes across the nation. In April, Anglicare Australia, a community service network for the Anglican Church of Australia, released their 2023 rental affordability report. Of 45,000 rentals surveyed across the country, only four fell in the affordable range for a single person on government assistance while looking for work. All were rooms for rent in shared houses. The waiting list for government funded affordable housing stretches to hundreds of thousands of people. Those with the greatest need anticipate waiting for housing for more than a year.
The roots of this year’s crisis stretch back decades. In 1999, Australia’s parliament cut the capital gains tax in half and made it easier to get a home loan. Investors took advantage of the break by buying investment properties.
Meanwhile, the government has been selling or demolishing its public housing, exacerbating an already strained situation. The private construction sector has failed to keep pace with the needs of prospective buyers and renters, immigrants, and low-wage earners.
Real estate agent Yan Lin said about 30 percent of current home sales come from a homeowner’s life change—people downsizing, upgrading, or moving away. She said investors make up the other 70 percent of home sellers, as landlords realize their investments could soon cost them more than they put in. Unless they pass on the hike to the renter.
Many do. Wages have increased 3.7 percent in the second quarter of this year, but some landlords have increased rent by 20 percent. Alternatively, some landlords converted their investment homes to short-term rentals with a company like Airbnb or Stayz for premium rental dollars. But these homes are unevenly distributed and don’t account for the greater lack in the city centers and closer suburbs where more lower-income families live and work.
But not every rental property gets mobbed at an open house. The only person who reserved a space failed to show at the open house on Church Street, deep in the Grovedale suburb of Geelong. The three-bedroom house is available for $1,841 a month, but the fine print on the listing shows the rent will increase more than $200 a month starting in February.
Homelessness in Australia has historically been relatively low, but it is increasing. At the last census, just over 122,000 people were considered homeless. Over the past year, the national Christian charity Mission Australia has seen a 50 percent increase in people seeking help after they’ve become homeless. The group can currently find secure long-term housing for only about a third of those who have nowhere to live.
Short-term solutions seem as sparse as finding a rental. Critics say that new affordable housing in Melbourne doesn’t meet the needs of the most needy. Prime Minister Anthony Albanese’s administration plans to increase the number of homes built expressly for those with lower income, but the bill that would make it happen is currently held up in the house. “We need more people on average to live in each dwelling,” a leader of the country’s Reserve Bank flatly stated.
Real estate agent Yan Lin says there’s nothing more the general public can do. “It’s up to the government,” she said.
Roby and Jacqueline Vicary told their landlords—Roby’s parents—of their desire to move out of their home in Grovedale, another suburb of Geelong, to find a bigger house to accommodate their growing family. That’s when his parents said they plan to sell both the unit the Vicarys rent and the one next door.
Roby and Jacqueline plan to move in with his parents. But many other young families don’t have the same option.
With the current market, the Vicarys realize that they may never be able to afford to buy a home while they’re renting. The money they save while living with Roby’s parents can be put aside to buy an investment property they could move into someday. “We’re looking for something in a high growth area with lots of space,” Jacqueline Vicary said. “We would want that for whoever rents there.”
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