Who is providing low-cost rental housing?

An analysis of the recently published 2021 ABS Census data clearly shows that low-cost rental housing is provided predominantly through public and social housing, and provides another reason to argue for the importance of public housing for rental affordability. While much of the detailed microdata is not yet available, the following looks at the South Australian rental data as published in the Community Profiles and QuickStats version of the census publications.

The SA Rental Market

The census data shows that in 2021, 27.6% of South Australian households were renting (percentage unchanged since the last census in 2016), with a median rent in 2021 of $300 per week. The ABS (Table G40) divides these numbers by landlord-type as follows:

Numbers of SA Renters by Landlord Type:
RE agent = 51%
Public Housing = 15%
Person not in same h/hold = 24%
Other landlord type = 4%

The category of “landlord as a person not in the same household” comprises those renting from family members or other persons – which means that private house or unit renters constitute 75% of all renters, although around a two-thirds of them are not necessarily renting at market rates (hence we will see later a skew to low rent properties). The “other landlord type” “comprises renters in residential parks (including caravan parks and manufactured home estates), renting from employers (including government employees under the Defence Housing Australia), but represents very different tenancies and will not be considered in this post.

The key categories for this analysis are the rental properties managed by real estate agents, which can be used as a proxy for the market rate for private investor landlords, and public housing – although some comparison will also be done for community housing.

Provision of Low-Cost Rent Housing

While South Australia retains a proportionately larger public housing state by comparison with other states, it remains the case that private landlords own the majority of rental properties in South Australia. Yet, when we look at the rent profile of these properties, we see the importance of public housing in providing low-cost rental housing.

The ABS data (Table G40) records the number of households by landlord type in a range of rental price brackets. While these rental brackets are not as good as individual household data, they are enough to show key differences. The graph below shows my calculation of the profile of rental housing provision based on the proportion of houses in each rental price bracket provided by private market investors (acting through real estate agents) and by public housing. Clearly the vast bulk of very low-cost rental housing is provided by the public housing estate, and indeed 70% of the public housing estate is being offered at rentals below $200 per week.

By contrast, the private rental market (via real estate agents) accounts for the vast bulk of properties in the higher rental brackets. And even though these private landlord rentals make up a higher proportion of rental properties at a fairly modest figure of just over $200 a week (the cross-over point of the graph), this represents a much smaller proportion (just 8%) of the private landlord estate.

Line Graph: Profile of Rental Property Provision by Price and Landlord Type showing public housing dominance in the provision of low-cost rental housing

Another way to look at this is by comparison to the median rental of $300 per week – which sits in the $275 – $$349 per week bracket. As shorthand, we can consider the rental price brackets below that as being “more affordable” and the brackets above it as “less affordable” – although this is a gross generalisation which will depend on income. Quite clearly some of the “more affordable” brackets are still not affordable for those on low incomes.

But based on this description, the data shows that while private landlords using real estate agents account for 51% of all rentals in SA, they only provide 27% of the rentals in the more affordable brackets below the median rent. By contrast, public housing provides 15% of all SA rental housing, but 33% of the rentals in the bracket below median rent.

It is also worth noting that the rentals from “persons not in same household” account for around 1 in 5 of rentals below $200 per week (and 1 in 3 at $200-$225 per week), so clearly family subsidy is a significant factor in the low-cost rental housing market. However, those without family owning properties will be largely reliant on public housing or facing the more expensive private rental market.

This importance of public housing in providing the lowest rental properties is probably not surprising given the ideological shift to “public housing as welfare” and the Productivity Commission data showing the extent of public housing “subsidy” on market prices (see my previous post for discussion and critique). However, the profile of private landlord properties evident in the data here should at least make one question whether policies aimed at incentivising more private landlords are likely to help with rental affordability for those on lowest incomes.

Community Housing

Another useful comparison that can be made from this data is between public housing and rentals from community housing providers. This is particularly important given significant transfers of public housing stock to community housing providers in South Australia (including the transfer of over 1000 public housing properties in 2017-18). This transfer was driven by a mix of policy concerns from broad neoliberalism to simply lobbying around ideas of greater flexibility or community connection in the not-for-profit housing sector. And more cynically, the state government may have been shifting maintenance and other costs to the community sector or simply gaming Commonwealth Rent Assistance (which is payable but tenants in community housing, but not public housing).

The graph below shows the profile of public and community housing, but not as above (as a percentage of provision of housing in each brackets) because the data is dominated by the public housing estate which is 3 times larger than community housing. Rather the graph shows the proportion of each estate in each bracket.

Both public and community housing are loaded towards low-cost rentals and both have very few high-rental properties, but the community housing sector has a greater proportion of properties with higher rent than public housing. While 70% of the public housing estate is rented at less than $200 per week, the figure is 54% for community housing, and community housing has proportionately more of its rentals at above $200 per week. In both systems are generally based on a percentage of income, so the difference is partly a product of different rent caps in the community sector and a clientele with slightly higher incomes.

Comparison of Profile of Public and Community Housing showing provision of low-cost rental housing

Conclusion

This is just a quick snapshot based on one part of the recently released census data, and there are of course regional differences in public and community housing estates (see separate Briefing Note). However, the snapshot data does suggest the important role of public housing in providing low(er)-cost rental housing in South Australia (and it would be the same elsewhere). The figures do not suggest that more public housing would provide downward pressure on rent across the market. That argument could be carried by simple supply and demand economics: more supply would lower (or put downward pressure on) prices, but the data does suggest that private landlord investment (outside of family and less-formal rentals) is largely not providing low-price rental accommodation – or at the very least, under-performing in its provision. Added to my previous arguments, both here and at SACOSS, it is another reason to invest in public housing!