Category Archives: Housing

Silly Housing Statistics 3: The CPI – Official silliness, or just misunderstood and misused data?

In previous posts I have criticised housing statistics produced by industry and the NFP sector. In this post I want to question the official housing statistics in the Consumer Price Index (CPI), which it turns out are not particularly useful in tracking housing costs. This is true even though the CPI includes specific data on housing and rent and is widely used for indexing and updating less frequent housing data.

CPI and Home Owners

The first thing to note about the CPI housing data is that, while it includes an item for house purchase prices, the actual CPI item is “New dwelling purchase by owner-occupiers”. In any given period, relatively few people purchase a house, and those purchasing a new dwelling is an even smaller subset, so the CPI figure here may not reflect prices for many home owners. But more importantly, the CPI figure for new dwelling purchases does not include land prices. In that sense, it measures the increase in the cost of building a new dwelling – which may be very different from changes in the market price of housing (particularly where there is significant speculation-based inflation).

Further, while the CPI includes this (limited) house sale price measure, it does not include mortgage payments (as they are not prices). Yet mortgage payments impact far more on weekly household budgets than house sale prices, and it has been mortgage increases which have driven much of what we now (mistakenly) call a “cost of living crisis”.

The absence of mortgage payments in the CPI is not the fault of the ABS or a problem in the CPI itself. It is a problem in the way the data is sometimes used. The CPI is about measuring price changes experienced by households – a measure of price inflation, rather than the cost of living. The inflation measure is important as a tool of economic management because of the (theoretical) macro-economic relation between production, money, aggregate price levels and jobs. It is particular measure for a particular purpose. In that sense, the statistical silliness is not in the CPI, but in its misuse as a cost of living measure.

The ABS recognises this and produces (a week after each quarterly CPI data release) Selected Living Cost Indexes, which include mortgage payments and are a much better reflection of the impact of housing costs on households. However, these living cost indexes are mostly ignored by the media (presumably out of ignorance) and economists (because their focus is on models rather than real households). Further, the Living Cost Indexes are produced for different household types (based on income-source) and don’t give a single headline figure which can be used conveniently for indexation in the way that CPI is used.

The bottom line is that using the CPI data is not useful in tracking housing prices.

CPI and Rent Prices

And it turns out that that the CPI rent data is not much more use in relation to rent. Unlike the commercial “asking rent” data discussed in my earlier post, the CPI does at least cover increases in existing rents not just new tenancies. However, the CPI significantly underestimates the increases in the market price of rentals (and so is less than helpful for indexing changes to other rent data). There are several reasons for this.

The CPI rent category includes public and community housing rents, which are income rather than market based. In South Australia, this accounts for around one-in-five rentals, but if these (predominantly Centrelink) incomes go up by less than private rents – as is likely in a tight rental market – the smaller increases in public housing rents will lower the overall CPI for rent.

Further, for those in the private rental market the data, the CPI is adjusted for increases in Commonwealth Rent Assistance (because the CPI is designed to capture the price paid by the consumer not the price charged in the market). The rent increases recorded in the CPI for tenants receiving CRA are therefore less than the market price increases.

This CRA adjustment to CPI is even more important because in recent years there have been two significant “above indexation” increases in the CRA. These were welcome increases for those struggling to pay increasing rents, but given that more than half of all tenants receive CRA it means that the CPI rent data further underestimated the actual rent price increases in the market. According to the ABS, without the changes to CRA, rents would have increased by 7.8% over the 12 months to the December 2024 quarter – as opposed to the 6.4% recorded in the CPI.

This is particularly important because it means that it is problematic to use the CPI to update other intermittent rent data. The graph below shows the census data on median weekly rent for the Greater Adelaide area. The census is one of the few sources which captures all rents paid (rather than just new rental agreements), and if the CPI accurately reflected increases in rent prices, the line would be a smooth increase from one census to the next. However, the sharp increases at each census point show that the actual rents actually increased quicker than CPI for rent.

Line graph showing median rents in the census data from 2006, 2011, 2016 and 2021, updated in between by CPI.

Conclusion

The result of all of the above is that, if we want to focus on all rents – rather than just the prices in new tenancy agreements – then we would need three different index series: one for public housing, one for tenants getting CRA, and one for unassisted private renters. While the CPI provides a weighted average index of these, it does not accurately reflect what is happening for each particular group. It exaggerates increases in public housing rents (if market rents are going up faster than income), but underestimates rent increases in the market overall (as shown above).

However, this shortcoming does not legitimise or provide a reason to use the “asking rent” data or the bond data for new tenancies as surrogates for actual rents or for measuring rent increases. As the graph below shows, there is a big difference between the rent increases in those data sets and the CPI. I suspect the real average rent increase is somewhere between these lines .

Line graph showing the difference between increases in the CPI rent and in the SA government rental bond data for 2-bedroom units and 3-bedroom houses - a 40 point difference in less than four years.

This brings us back to where I started this series on silly housing statistics: there is actually no data that shows average rents in capital cities, and in this case, no way to unproblematically track or index rent increases. Yet we can’t just abandon the data, the housing crisis is too important. But we can try to understand and qualify the data to avoid using silly housing statistics.

Silly Housing Statistics 2: I am Priced Out of a renting a beachside house

In my last post I suggested that the claim that Melbourne rents were cheaper than Adelaide was a silly statistic – basically not true, and obviously so. That was the first of a series of posts on silly housing statistics and highlighted a problem with commercially-produced housing statistics. This week’s silly housing statistic comes from my world of not-for-profit advocacy for better housing.

A leading body in this NFP advocacy is the Everybody’s Home campaign which is a coalition claiming over 500 organisations, businesses and councils, and more than 43,000 individuals across Australia, aiming to tackle the systemic drivers of housing insecurity and inequality.

Last year they produced their Priced Out report which included a common, silly statistic used by our sector. I pick this report as an exemplar because of the organisation’s prominence and the importance of the recommendations in the report (which I support), but also because the methodology is repeated across other reports.

The Priced Out Statistics

The report uses SQM Research’s data on asking rents as its key statistics.[1] As I argued in my previous post, these are probably an inflated starting point for rent, and at times the Priced Out report slips into the language of representing these asking rents as all rents (rather than just new tenancies). But this is not the really silly statistic in the report. That comes in the key table (excerpted below) which compares the income of various low-income households with the SQM weekly rental data, and then calculates the percentage of income that would be required to pay the rent on a housing unit. All the results are well over the usual housing stress measure of rent above 30% of income.

Table 2 from the Priced Out report showing national comparison of various weekly incomes, average weekly rents and percentage of income required for rent.

These results would be concerning, but for the fact they are silly housing statistics. They are an asymmetric comparison of a very low income with a median rental price. It is an apples-to-oranges comparison resulting in the grand claim that people on low-income households can’t afford houses that are affordable for someone on twice their income.

Think about it: I can’t afford a beachside house, but I could if I had twice the income. That does not mean that I am at risk of homelessness or even in housing stress. It simply means that I need to have a house that is affordable on my income. The comparator to a market average does not give me data on that. Arguably, the relevant comparator for someone in the bottom 20% of the income spectrum is whether they can afford the cheapest 20% of houses, not the median market price.

It would be theoretically possible for all people in the lowest income bands to afford housing if the rental market spread reflected the income spread. Obviously it doesn’t, which is why the work of Everybody’s Home is so important – I just wish they wouldn’t use silly housing statistics to make otherwise good arguments.

Similar but better options

In my SACOSS role I have done similar income-rent comparisons, but the comparison is to median rent in the cheapest suburbs. In the September Quarter of 2024 the median rent for a 2-bedroom unit in the cheapest suburbs in Adelaide was $60 p.w. below the figure across the city as a whole. By my calculation, an Age Pensioner would require 60% of their income to rent a 2-bedroom unit in the cheaper suburbs of Adelaide, while the Everybody’s Home report puts the Adelaide figure at 74%. Similarly, the Priced Out estimate of 101% of a single JobSeeker’s income for a housing unit is reduced to 82% using the SACOSS methodology – still alarming, and grossly unaffordable, but a more accurate and defensible statistic.

However, the SACOSS methodology is arbitrary (defining the cheapest suburbs as the bottom half) and clunky (in that it is a median of suburb medians rather than a true median of cheapest suburbs).

A far better alternative is provided by the annual Anglicare Rental Affordability Snapshot. Its methodology is simple (but no doubt resource-intensive for them), but for me, it is probably the best of the NFP housing reports. It simply surveys all the rental properties listed online on a given weekend and compares them to the established income-types (Minimum wage, JobSeeker, Pension etc) to see how many are affordable (using the standard 30% of income measure). There remains the issue (discussed in my previous post) of non-advertised rentals, but there is no comparison in the Snapshot to a median price or to properties which would never be expected to be in the price range. It is a scrape to see if any rentals are affordable. Sadly, the answer is usually that there are none or next to none.

This is not a silly housing statistic – it is a damning one! And again, it shows why we need well researched advocacy for changes to the housing system.

[1]              The SQM methodology is more complicated than a simple data scrape, but still relies largely on real estate agent data (the limitations of which are in my last post). Curiously, they also claim their results closely align with ABS CPI rental data – which in the next post I will argue is a government-produced silly housing statistic!

Silly Housing Statistics: Is it more expensive to rent in Adelaide than in Melbourne?

This is the first of a series of articles on “silly housing statistics”, highlighting how bizarre claims are made with inaccurate or mis-used statistics. We begin with the claim made at the end of January that Adelaide rents had surpassed those in Melbourne for the first time. The story came from housing market analysts PropTrack and was covered in the Advertiser (see below) and elsewhere.

An example of a silly housing statistic - photo of the story from the Adelaide Advertiser, 31 January 2025, headed "Rent costs more here than in Melbourne"

Now I like a “killer stat” – a statistic which sums up an issue and grabs attention for a policy argument. I try to get such stats in most reports I write, but I also try to get the statistics right! So, is the claim about Adelaide and Melbourne rents right?

Turns out, the answer is complicated – and a bit of a primer on housing data.

A Silly Housing Statistic

The PropTrack data says that Adelaide’s median weekly rent in the December quarter of 2024 was $580, although this figure for the “asking” or advertised rent was considerably above the official government data on the median amounts actually agreed and paid – which was $550 per week. (The differences here are discussed further below).

Unfortunately, the official Victorian government data won’t come out until the middle of the year (which is why commercial data like PropTrack gets the headlines!). However, the PropTrack data suggests no change in the Melbourne median rent in the December Quarter – which if applied to the official data from the September Quarter would put the median rent at $560 p.w. – that is, above the Adelaide median.

We might also get a hint of the silliness of the “Adelaide more expensive than Melbourne” claim from another commercial data source. The SQM analysis for mid-quarter (12 November) showed Adelaide median rent at $609 per week, but Melbourne at $627 – both significantly higher than the PropTrack figures, but with Melbourne clearly higher than Adelaide.

But really, all these are silly statistics because the comparison is meaningless without also considering the mix of housing in the data. For instance, if rental houses are more expensive than units, then if one market has a greater proportion of houses than the other, its median rent price will be higher even if the comparable prices are lower. That is particularly relevant here because, at least in the September Quarter, only 40% of Melbourne rentals that quarter were houses by comparison with 55% of Adelaide rentals. That would make the overall median rental in Adelaide relatively higher, even if the rent for particular property types is lower.

Similarly, we would need to add location into the housing mix because if the majority of available rentals are in inner-city locations the median price would be higher than if the majority were in outer suburbs.

A further level of complexity here is provided by the government data for the September Quarter. It shows that Melbourne rental prices for units were significantly above Adelaide prices, but $25 a week lower for a 3-bedroom home. The housing mix clearly matters to the overall average – although it should be noted that the SQM data for September showed both Adelaide house and unit prices significantly below those in Melbourne.

A Silly Endeavour?

It is all a bit messy, and in that sense, the silliness of the Adelaide-Melbourne statistic is as much about making the simplistic comparison in the first place as it is about the conclusion of which jurisdiction is more expensive.

But even if you can sort through the comparison issues, there are also some pretty big questions about the usefulness of the base data.

The sad truth is that, despite a flood of housing data, there is actually no data that usefully gives average rents paid in each city, and no real basis from which we can say which city is more expensive – or more generally, what is happening “for renters”.

Navigating Rents, Rent Prices and Asking Rent Data

The first issue is that, all of the above data is in fact not comparing rents in Melbourne and Adelaide – it is comparing rent prices for new tenancies. But new tenancies are less than 10% of the total rental market (my calculation from SA bond data and 2021 census data). So it is simply a misrepresentation (and a silly housing statistic) to say, as in the Tiser headline, that these numbers refer to “rents”.

That said, there may be good reasons to focus on price of new tenancies. These prices represent the current market price faced by people looking to rent, and it is arguably a lead indicator which other rentals will follow. However, even with this focus, and even if what was being measured was accurately described (which it is usually not), there would still be problems.

There are two key data sources of data on rental prices for new tenancies: official state government data based on rental bonds paid, and the “asking rent” (i.e. advertised rent prices) data which is produced by a range of commercial firms (e.g. PropTrack, CoreLogic, SQM) that scrape real estate sites on the web to produce data and spruik their analytical tools.

As we saw above, there are data differences between the companies even on what the asking rent was, but the asking rents may also not be the price the property is rented at (which is what is captured in the official data). For instance, rent-bidding may mean actual prices go beyond the advertised price, but landlords may also wildly overestimate the rent they can get (the Tiser headline could also have read “Adelaide landlords more optimistic than Melbourne counterparts”!).

Further, web sites like realestate.com.au and the other commercial sources are dominated by advertisements from real estate agents, but real estate agents only manage about two-thirds of Adelaide’s private rental properties. The other third may not be advertised or captured by the web-scraping data, and rents tend to be below the real estate agent’s “market price” (see Census GCP4GADE – Table 40).

The difference between asking and actual rents is clear in the table below. It compares rental bond data for Adelaide metropolitan area for each quarter last year with the SQM asking price data for the week in the middle of each quarter. The SQM data (from their National Vacancy Rate reports) is used because it is well-respected and accessible, but as the table shows, the asking price data is 6% to 17% higher than the median rents actually paid by new tenants.

Data table comparing SQM Adelaide rents with rental bond data for units and houses for each quarter of 2024.

Silly Housing Statistics

So, in summary, the data behind the fairly counter-intuitive claim that Adelaide median rents have surpassed those in Melbourne refers to only a fraction of rents being paid across the market, and is inaccurate even in relation to new rentals because it only relates to advertised prices rather than the rent prices actually agreed and paid.

This makes the headline claim about Adelaide prices surpassing Melbourne a particularly silly statistic – and the media’s uncritical reporting of it even sillier.

However, our beloved Tiser is not alone here. A lot of media and even so-called expert commentary, either blindly or lazily, blurs the differences or makes leaps from asking price to rent prices to rents in general. The result is analysis which is inaccurate, over-generalised or at least questionable given the limitations of the data.

Beware the silly housing statistic.

Compare the Pair: Income Inequality on the Same Income

Can a homeowner really be $30,000 a year better off than a renter with the same income?

We are all familiar with superannuation ads asking us to “compare the pair”: two otherwise similar workers in different superannuation funds getting very different financial outcomes. Today I want to do a similar exercise for the extended incomes of two people on identical wages, with the only substantive different in their lives being that one owns their own home, while the other one rents.

The different financial outcomes that result go beyond just the amount of rent that one of the pair pays. Nor are they based on lifestyle or consumption differences, clever investment strategies, complex tax minimisation planning (beyond a basic voluntary superannuation contribution), or any other scheme beloved of financial planners. As such, and with everything else about their lives the same, the compare the pair exercise enables us to draw some interesting conclusions about the role of housing and taxation in inequality.

Inequality - not what you think

Compare the Pair

Renter-Greg and homeowner-occupier-Greg both work as professionals in suburban Adelaide and earned $100,000 last financial year. They both live alone, but are neighbours in the same set of home units. Renter-Greg pays $350 a week in rent, while home-owner-Greg is an owner-occupier who paid off their mortgage six years ago. Ever since paying off the mortgage, homeowner-Greg has been making voluntary superannuation contributions equivalent to renter-Greg’s weekly rent – leaving both with the same weekly consumption expenditure (neither saves or invests any further or has any other source of income).

You get the picture: a standard simplified model where all other factors are equal so any differences in financial outcomes are only the result of different housing costs and the ability of homeowner-Greg to put money into superannuation. Of course, the ability to buy a home and invest in super may be conditioned by all sorts of social factors, but the model could also simply be viewed as a comparison of potential financial outcomes of the same person with different housing tenure.

As the table below shows, the bottom line is that homeowner-Greg is nearly $30,000 a year better off than renter-Greg, despite them having the same employment income.

TABLE 1: Comparing the Pair, 2023-23

Compare the Pair: Table showing renter and homeowner comparison, with homeowner $3k better off after tax, then earning $18,200 in imputed rental income, and $8,565 in return on extra superannuation contributions.

(a) Tax is calculated using the ATO simple tax calculator, with homeowner tax based on income tax on $81,800 salary and 15% of $18,200 voluntary super contribution.

(b) Income from voluntary super contributions does not include the voluntary contributions themselves, only the income on the accumulated balance of these contributions, calculated using an industry average rate of return (9.2% for the 2022-23 year, and 5.8% for each preceding year).

Explanation

The first step in comparing the pair is simple enough and is just based on salary income and tax. As can be seen above, homeowner-Greg has a higher disposable income because of the tax concessions on voluntary superannuation contributions.

When we include housing costs, the difference is starker. As noted in a previous post, accounting for housing-costs in income comparisons is common in poverty research (which is usually based on after-housing incomes), while the national accounts also recognise the value of housing ownership by including a value for rent that owner-occupiers are deemed to pay themselves in their measure of the size of the economy. The value of this imputed rent is added to homeowner-Greg’s income (because the value of this free housing service is income-in-kind). The result is a further increase in income inequality, with homeowner-Greg’s after-housing income being 28% higher than renter-Greg’s income.

The next step is to account for the extra income homeowner-Greg receives from being able to make a voluntary superannuation contribution. When this investment income is included, homeowner-Greg’s extended income is nearly $30,000 higher in the year than renter-Greg’s. Again, this is based solely on home ownership and the ability to invest the money saved on housing costs in superannuation.

Alternatives

A significant part of the difference in financial outcomes above comes from the superannuation investment. If homeowner-Greg just put the savings into a standard bank account, they would not get the benefit of the tax concession and would have lower returns on accumulated savings. However, with a relatively modest interest (2% ->3%), they would still get some $2,600 more income than renter-Greg in the 2022-23 financial year.

Of course, homeowner-Greg could also just spend the money not going on rent rather than invest it, which would mean less difference in the long-term, but significantly higher weekly consumption and standard of living than renter-Greg on the same income.

There is one final calculation that could be made to include the value of the capital-gain on the house in homeowner-Greg’s annual income. Home unit prices in Greg’s neighbourhood increased by 8.8% in 2022-23, so homeowner Greg would have “earned” $39,600 in capital gains on his $450,000 unit (average unit price). That would bring the difference between renter-Greg and homeowner-Greg’s income to $68,650, or more than two-thirds of their starting income (gross salary). I have argued previously that capital gains are an important driver of inequality which are overlooked in most data, but there is also an argument to exclude capital gains for owner-occupied housing. This is because unlike pure financial investments, where capital gains are a key return, owner-occupied homes are not simply an investment product. They fulfill a basic need (housing), and while a capital gain may be realised upon sale, most people selling are buying another house in the same inflated market – so they are really simply swapping one house for another, not gaining wealth through the capital gain.

The arguments here are complex, and excluding capital gains on the owner-occupied residence probably underestimates the differences between renters and homeowners. However, the compare-the-pair data above shows that even on the conservative estimate, homeowner-Greg’s extended income is 39% higher than renter-Greg, despite doing a similar job for the same pay.

Conclusion and Implications for Analysis

The most obvious conclusion from this data is that it pays, literally, to be a homeowner. However, it is also important to note that the capital income from accumulated voluntary super payments, and therefore the extended income differences between home-owners and renters, will grow over time as investment income increases with capital gains and further contributions.

The compare the pair exercise also has broader political economy implications. It provides further evidence that the standard statistics on income inequality which deal only with money income hide significant inequalities between people/households who appear to have similar incomes.

Further it supports the argument put by Lisa Adkins and others that capital gains and capital income, rather than employment income (which in the Gregs’ case is identical) are the preeminent drivers of inequality.

It is also evident in the comparison above that the tax system is failing its redistribution function. In this case the tax system not only does not tax aspects of tax capital income, the concessional tax arrangements applying to superannuation promote the inequality between these two people on the same money income.

Implications for Advocacy

Finally, this compare-the-pair exercise raises questions for my own work at SACOSS and the approach of many anti-poverty advocates who have traditionally focused on championing rental affordability and renters’ rights. This focus undoubtedly supports those likely to be most disadvantaged in the housing market. However, the data above shows that the fact of them renting puts renters on the wrong side of increasing inequality – which might suggest merit in the traditional conservative focus of getting people into home ownership.

Put another way, an anti-poverty agenda would direct policy (and money) to supporting rental affordability, while an equality agenda might direct policy and resources to enabling more people to own their own home.

Of course this is a false dichotomy. Policies such as increasing Commonwealth Rent Assistance address both poverty and inequality issues, while some people will never be able to afford to buy a house so “the Australian dream” policy options are limited (and expensive).

However, the analysis does highlight the fact that even if we secure tenants’ rights so we become Europeanised and life-long renting is becomes a potentially desired option (rather than a forced option), renters will still be disadvantaged. Perhaps most challenging, this analysis also applies to those in public housing, who will be better off than they would be in the private rental market, but will nonetheless be falling behind homeowners on similar incomes.

Clearly, while current policy directions to increase renters’ rights and the provision of rental housing are absolutely necessary, we also need to change tax and other policies to reduce the difference in financial outcomes between renters and homeowners.

The Landlord Myth and Housing Supply

The South Australian parliament recently voted against a Greens’ proposal to cap rent price increases to CPI. There were a few cold-war rhetorical flourishes about free market capitalism and an argument that governments should not dictate to landlords what they can and can’t do with their property, but the main reason the other parties opposed the proposal was a concern it would drive landlords from the market and reduce the availability of rental properties (see Hansard, from page 2571). Similar arguments are often also raised in relation to increasing renters’ tenancy rights because it might spook landlords into selling up and leaving the market. These are really statements of the great landlord myth: that landlords contribute to housing supply.

Given the parliament’s attachment and propagation of this landlord myth, I am forced to argue (yet again, and not originally) that most landlords do not create housing or add to housing supply. By definition, landlords are rent-seekers, in both the colloquial and economic meaning of the term “rent” (the later referring to unequal returns based on market positioning rather than productive value added).

Housing Supply

A house is a house, and (as long as it is occupied) it provides shelter and a home for one household, whether it is owner-occupied or rented out. When a landlord sells their house, it is either bought by another landlord (probably using the extra market power provided by negative gearing) or by a new home buyer (or another home owner, whose existing home will be sold eventually leading to a new home buyer). No new housing has been created by the ownership or the ownership change. There is still only one home for one household. In the later case, there will be one less rental property in the market, but also one less renter demanding a house.

Of course, when a landlord fixes up a derelict house and rents it out, or builds new rental housing, they are adding to the stock of housing. But most landlords simply buy an existing house. There remain the same X houses for Y households.

But while the government has bought into the landlord myth, it is still right that there is a problem of lack of rental supply. Rental vacancy rates in South Australia, that is, the number of rental properties being advertised as a proportion of all rental stock, is at historic low levels. In March this year, the vacancy rate in Adelaide was 0.5%, down from 2.1% in December 2016. The government rental bond data shows what this means in practice. In the last quarter of 2016 there were 15,630 bonds lodged for new rentals across the state, but in December last year the number was down to 12,725. This represents a significant decline in availability. In this context it is no surprise that rent prices are increasing well above the general inflation rate.

Housing Supply and Renters’ Rights

The problem with the government’s argument is not the analysis that lack of rental supply is driving a crisis in rental affordability, it is just that the problem is not related to rental rights. A key report from AHURI, one of Australia leading housing research bodies, shows a lack of an empirical link between renters’ rights and landlords entering or leaving the market. Other factors were the big drivers of landlord behaviour.

Of course this research referred largely to renters’ rights within the tenancy contract, and arguably a rent price cap (e.g. limiting rent increases to the general inflation rate), may be different because it is a direct impact on a landlord’s revenue stream. But is the result really different? If a rent cap means that a landlord decides their return on investment is insufficient, they can sell their house – with the zero net impact on housing supply noted above. The only short-term impact on rental supply would be if a landlord decided that the rent-increase cap meant the property was not worth renting out and they leave it empty. But it is a strange maths that leaves a landlord better off receiving no income from an empty house, rather than “settling for” $20 or $40 a week below what they wanted.

And in the long run? Yes, a capped revenue stream may discourage landlords buying houses to rent out – but that is only a problem if we believe in the landlord myth.

As the AHURI report concludes, when renters already have very limited rights:

“Where landlords or their representatives say it is too difficult and they will disinvest from existing private rental system dwellings, this should not be taken as a threat, but as a good thing: that is, the incapable and the unwilling exiting the sector, and thereby opening up prospects instead for new owner-occupiers or for differently oriented landlords—especially non-profit rental housing providers.”

Community advocacy organisation, Better Renting, put it a bit more bluntly:

“landlords who sell because they don’t want to comply with the law are probably pretty shit landlords to be honest, and we’re better off without them.”

Building New Housing

So the bottom line is that, if it is not renters rights driving a rental supply and affordability crisis, then rather than depriving renters of rights or leaving them exposed to market prices which are unaffordable and lead to stress, sickness and/or homelessness, we just need to build more houses.

This creates a further problem in that developers will use this market shortage to demand government support and handouts, or to change zoning restrictions or avoid environmental protections. This too is pot of profiteering from people’s need for shelter, but at least developers are building houses (although not always of a type or to standards we may want)!

I say this as I sit just a short walk from hectares of waterfront land “sold” to a developer for $2 so they could bulldoze heritage buildings and build a housing estate. Development. It is the sort of deal governments do when they are desperate for someone to build new housing. They will roll over and do almost anything, anything that is except actually build the necessary new housing themselves!

A saner alternative, one which was at the heart of South Australian development in a previous era but conveniently forgotten with the onset of neoliberalism, is to build public housing. Building public housing not only increases housing supply overall (and the community’s wealth) – it is a build-to-rent scheme which adds directly to rental supply putting downward pressure on rents across the market. As I noted in a previous post, public housing is also particularly important because it provides housing to those on very low incomes and most marginalised in the housing market.

The Scale of Building Required

In February this year, the state government announced new housing initiatives (mischievously titled A Better Housing Future – the previous’ government’s plan was Our Housing Future). A centre-piece of this was the promise to stop the sell-off of public housing and investment in building more public housing. This was a welcome turn-around, but calculations I did elsewhere showed that the promised 564 new public houses over four years would not be enough to keep pace with projected population growth. That is, even with the promised new housing, the proportion of South Australians in public housing would still decline.

To maintain the current market share of public housing and keep pace with population growth, South Australia would need to build 1,421 new public houses by 2025-26 – more than double the government’s plan. Even more challenging, to begin to rebuild public housing assets at the rate they declined in the preceding 4 years we would need to build around 3,600 new public houses – more than six times the current investment.

Conclusion

Unfortunately building public housing – or any housing – takes time, which means that the current rental affordability crisis is not going to go away quickly. However, that does not mean that in the interim we need to continue to punish renters or make them bear the costs of a market that does not work. Yet it looks like that will continue to happen as governments and much media commentary accept and propagate the landlord myth, a myth that enables landlords to leverage support for their interests without actually contributing to the housing supply needed to end the rental affordability crisis.