A new report has highlighted the surge in housing unaffordability with Melbourne having recorded the biggest fall in affordability across the country over the past two years and Sydney continuing to be the least affordable city, while conditions for tenants in Brisbane are getting worse.
The Rental Affordability Index, released on Wednesday, also illustrated Australia’s growing rental inequality.
Index co-author National Shelter’s executive director, Adrian Pisarski, said that although more supply had recently come onto the market, many new properties were not available to rent.
Many foreign investors, significant contributors to apartment construction, probably intended to just park money in Australian property, he said. Some off-the-plan properties also came with a rental guarantee, which meant it might not be leased for a few years.
Up to 90,000 properties are empty in some of the Sydney’s most desirable suburbs, according to UNSW’s City Futures Research Centre.
Furthermore, as many as one-fifth of all investment properties were vacant in Melbourne, a study of water usage by Prosper Australia shows.
Treasurer Scott Morrison told the Urban Development Institute of Australia last month that high housing costs were a supply problem, but Mr Pisarski said supply wasn’t the answer.
“We need dedicated supply of affordable rental housing, like what we were getting out of the National Rental Affordability Scheme,” he said.
Solutions included inclusionary zoning – where a percentage of new developments was allocated to social or affordable housing – and tax incentives to attract private investment to grow affordable housing supply, he said.
The Australian Taxation Office recently ruled that landlords who listed their properties at lower than market rates with not-for-profit real estate agency HomeGround Real Estate would be eligible to claim a tax deduction. A $500 a week property, leased for $300 a week to a low-income family, would be able to claim the $200 difference in tax return.
Melbourne’s lowest income households face one of the most dire situations of all Australian metro areas; mostly single-person households would pay near 110 per cent of total income on rent, even after discounting average rents by 25 per cent for access to social housing.
“Obviously, this group is pushed beyond the margins of the market. Not surprisingly, we have seen a doubling of people sleeping rough in the streets of Melbourne over the last two years,” Ellen Witte from SGS Economics and Planning said.