Melbourne’s Rental Squeeze: call for government incentives

Experts are urging the federal and state governments to introduce incentives to take the heat out of Melbourne’s rental squeeze as fresh data shows it is unaffordable for median wage earners to rent in one-third of suburbs.

New research by the Tenants’ Union of Victoria reveals a marked shift in affordable suburbs over the past 15 years – from the inner and middle-ring suburbs, to the outer suburban fringe, and from the outer south and east to the outer west.

Analysis of Domain Group data on median weekly house rents shows 35 per cent of 340 Melbourne suburbs, with at least 10 advertised listings over the past six months, are now unaffordable.

Many families are forced to the fringes, or risk pumping into rent more than 30 per cent of the median weekly disposable household income of $1500.

Oakleigh ($400 a week), Box Hill ($428), Bulleen ($430), Pascoe Vale South ($400) and Footscray ($400) are the suburbs closest to the CBD in each direction that offer house tenants most value for money.

The union’s Shifting Geographies of Rental Affordability report, based on analysis of Department of Human Services data, showed there were typically between 100 and 200 affordable rentals across inner-ring municipalities in any given quarter for the past 15 years.

In the middle eastern and southern areas, affordable lettings peaked at nearly 800 in 2001 and have dropped off considerably to levels similar to the inner ring.

The affordability advantage of living in the northern and western middle-ring municipalities, with more than 1400 affordable lettings over the September quarter in 2005, has also evaporated to the current quarterly level of between 200 and 350.

Yaelle Caspi, policy officer at the Tenants Union of Victoria, said the government needed to increase the Commonwealth Rent Assistance and funding for social housing.

It is not just low-income tenants feeling the pinch.

Ms Caspi said 38 per cent of Victorian private renters were in housing stress – paying more than 30 per cent of their income on rent – compared with 76 per cent of low-income tenants.

Professor Richard Reed of Deakin University called for a review of the national rental affordability scheme – introduced in 2008 to tackle the severe shortage of lower-end rental stock by giving investors tax incentives.

He said it was not fully understood and some investors tried to take advantage of the scheme.

Incentives to reverse the trend of declining home ownership, such as stamp duty concessions and exemptions could also relieve pressure on the rental market, he said.

A national rental affordability index launched in November by National Shelter, Community Sector Banking and SGS Economics and Planning revealed Melbourne had been the most affordable capital city for renters over the past three years. But low-income households still faced rental stress.

Adrian Pisarski, of National Shelter, said there was virtually nothing affordable in Melbourne for low-income earners in the bottom 40 per cent of households.

The state government should consider how the planning system could help rental affordability, he said, such as inclusionary zoning. The zoning would ensure affordable housing is designated in all new developments.

He believed the Fishermans Bend renewal project was a missed opportunity.

Ellen Witte of SGS Economics and Planning said low-income families pushed far from the CBD were in a dire situation because they faced extra costs of commuting to work, and it might also prevent them from finding good jobs.

Rental stress could also have an intergenerational impact on the children of these families, she said, because they had fewer optimal education opportunities.

Domain Group chief economist Andrew Wilson said house rents were likely to continue to rise, with strong migration and Melbourne’s economy attracting job seekers from interstate.

The $1500 median household weekly disposable income was based on updated ABS survey data provided by Australia National University social research academic Ben Phillips.

Mr Phillips said Consumer Price Index numbers suggested rents generally had been growing in line with Victorian incomes for the past couple of years.

Article originally published here