By guest author Eliza Owen
The term ‘Generation Rent’ is thrown about in media headlines to reignite the gripes between Millennials and Boomers. But inter-generational warfare aside, long-term renting is an increasing reality for young and low-income households, as property prices have vastly outstripped wages growth.
Domain data shows annualised growth in capital city dwelling prices over the past 20 years is 6.6 per cent. ABS data suggests that annualised wage price growth is less than half that.
Private renting has grown about 15 per cent between the 2011 and 2016 Census dates – the fastest growing type of tenure in Australia.
This data alone does not indicate whether the rise of renting is by choice or necessity. In panel discussions, or Q&A sessions spent lamenting unaffordable housing, I am very often asked:
However, owning your own home has several advantages.
These include stability, autonomy over your space and reduced housing costs by retirement.
But if a growing number of Australians cannot buy, then it is essential to incorporate stability, autonomy and affordability into the rental market.
Australian rental markets need longer leases to increase stability. Build-to-rent may boost security for renters, with longer leases and long-term, corporate ownership. The 2019 federal election saw a renewed focus on the sector, as the Labor party proposed tax breaks for income that came from build-to-rent.
However, build-to-rent is not necessarily affordable renting. Research of the sector overseas suggests build-to-rent can be more expensive than the private rental market.
Importantly, build-to-rent is advocated mainly by the property development sector, rather than tenants, and needs engagement from a wider group of stakeholders.
We also need to drop the narrative that Millennials choose to rent to sustain their trendy, flexible, metropolitan lifestyle. A recent HSBC survey found renters are not as happy with their living situation as those who own their home. A HIA housing survey found that 92 per cent of renters aspire to own their home. Tenant organisations and social housing groups have similar survey findings.
In Sydney, group households (share-housing) increased 18 per cent between the last two Census dates, against a total household increase of approximately 7 per cent. In an expensive rental market, this kind of living can be uncomfortable for some, and devoid of choice.
Finally, we need reform around retirement, because Generation Rent is growing up in a society where home owners have more chance of a comfortable retirement.
How does Generation Rent minimise housing costs by the time they stop working? Where does Generation Rent draw equity to fund high health or care services?
AHURI research from 2010 reveals up to 18 per cent of older Australians had withdrawn home equity, with health costs being one of the main reasons. Research by the Grattan Institute reaffirms that those renting in retirement may be subject to poverty because they still have to pay rent in a stage of their lives when they are not working.
These are challenges that require more affordable rental housing, increased aged-care provisions or rental assistance.