From short leases, frequent moving, rising rents, and no long-term security, a new report on Australia's housing crisis has revealed that Australia's current rental system is "broken".
For the Australians who are struggling with these challenges none of this would come as a surprise, but the extensive report on Australia's housing crisis released by online settlement platform Pexa and residential property business Longview comprehensively reveals a system in crisis.
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The white paper says renters face two distinct challenges in the nation's private rental market: affordability and experience.
The researchers found that rental prices over the past three decades had consistently outpaced inflation and, although median wages had largely kept pace, this was not true for Aussies getting by on lower wages or government benefits. Furthermore, the report notes that vacancy rates have dropped to record lows in the east-coast capital cities, with rental competition and affordability reaching crisis levels.
It doesn't stop at affordability though. The report's authors said Australia was one of the hardest places in the developed world to be a renter. The biggest problem, they said, was insecurity: long-term leases are rare, and renters live with constant uncertainty about whether they'll have to move.
The report showed that renters are moving as many as five times in five years, with less than 20 per cent of renters reporting they had stayed in one residence for five years.
The report notes that maintenance is often a headache for tenants too, and there are few incentives for the landlord to improve properties, for example through energy retro-fitting. Renters also often have limited or no ability to make minor improvements. These factors together make it difficult to turn a rented unit, apartment or house, into a home.
Landlords also suffering
Surprisingly though, the report also found the system didn't work very well for some landlords either. Investing in property is often perceived in Australia as a good way to make money yet the report showed those investors would've made more money by putting it into superannuation, with typical individual property price growth failing to outpace typical mortgage rates.
The report says these difficulties partly explain why half of all investment properties exit the rental market within five years and, noting that sale is the most common reason for landlord-initiated lease terminations, suggests the poor experience of landlords is closely related to the insecurity that underpins poor experiences for renters in Australia.
Having said that, the report's authors also note that the last 20 years were a particularly good time to be a property investor, with mortgage rates remaining at record lows for a number of years. The white paper is the second in a series of three, with the first, focusing on purchase affordability, released in February, and the third, focused on solutions, to be released in the second quarter of 2023.