Additional Comments from Coalition Senators

Introduction

1.1The Coalition members thank all stakeholders who have participated in this inquiry to date, acknowledging the concerns expressed in the evidence of the witnesses who made submissions and appeared before the inquiry’s hearings.

1.2The Coalition members have always believed in the principle of home ownership. Nevertheless, it also acknowledges that many Australians, whether by choice or necessity, rent instead.

1.3As noted in submissions to this Committee, there are complex and evolving pressures on the Australian rental market making it increasingly difficult to rent. Coalition members note the views expressed in the recommendations presented in the inquiry’s interim report and would like to highlight additional comments below.

The issue of affordability

1.4Since the election of the Albanese Labor Government in 2022, Australia has witnessed a marked escalation in its rental crisis, characterised by significant increases in rental and housing costs nationwide. Sixteen months into the tenure of the Albanese Labor Government, the absence of notable improvements is both disheartening and anticipated. The Coalition remains focused on holding the Government to account in what we consider to be a broader housing crisis, encompassing a rental crisis as well.

1.5Of particular concern to the Coalition is the issue of affordability. Data indicates a 3.2 per cent quarterly rise in rents for three-bedroom properties, with an increase of 9.9 per cent over the past year. The weighted average median rent for 2-bedroom other dwellings increased over the quarter by 3.6 per cent, and annually by 18.7 per cent.[1]Anglicare Australia’s submission to the inquiry highlighted this issue:

Rents increased by nearly 11 percent in the past year, with no sign of slowing down… as prices continue to rise, there are few signs this climb will slow down.[2]

Vulnerable cohorts and the lack of public housing

1.6The St Vincent de Paul Society highlighted that cost-of-living pressures are intensifying housing stress, with individuals resorting to living in their cars or motels.[3] Addressing the increased risk of homelessness during this housing and rental crisis must be a priority for the Albanese Labor Government.

1.7Several submissions relay heartbreaking personal stories. The Salvation Army provided the example of Joanne, who remains at risk of homelessness despite securing a rental property through the National Rental Affordability Scheme (NRAS):

Joanne was 27 years old when she became homeless following a relationship breakdown in 2021… she was forced to sleep rough for a period of two years… Joanne then applied and secured a NRAS property… Joanne remains at risk of homelessness in the event of a rent increase at the end of the lease period.[4]

1.8The psychological and emotional toll on families as a result of government inaction is evident from a multitude of submissions.

1.9The Coalition members observe that this Committee has so far focused on the testimonies of vulnerable rental cohorts struggling to compete in the private rental market. This underscores all levels of government's failures to provide clear and consistent policy surrounding public and community housing, placing the onus on private landlords to reverse-engineer solutions to government-made problems.

The private rental market’s role in rental supply

1.10The Coalition members note the Albanese Labor Government’s silence on the matter of property rights. It is important to note that most private landlords are ‘mum and dad’ style investors, investing in property to create wealth and safeguard their retirement. These investors are by no means the ‘big end of town’ and are overwhelmingly quiet, aspirational Australians looking to safeguard their retirement.Over 70 per cent of the investment property pool consists of these investors,[5] defined as those who own a single investment property aside from their primary residence.[6]

1.11Maintaining the rights of property owners is essential, given the important role private investors play in maintaining rental supply. With approximately 30 per cent of Australians renting, only 3 per cent of rental stock is currently provided by state or territory governments as social and affordable housing, while 27 per cent is provided by 'mum and dad’ style investors in the private rental market.[7]

1.12The Housing Industry Association surmises onerous policy initiatives such as rent caps will incentivise ‘mum and dad’ style investors to abandon the standard residential market and turn to short-term rentals or sell their properties, reducing private stock available for rent:

They'll either do as Tim suggested and go into short-term rental-type approaches or take a profit and sell because the value of the home has increased. There is a risk with that.[8]

1.13As outlined in the Productivity Commission’s submission,rent control is not an effective way to improve affordability for renters, as this artificially depresses rents and decreases supply of new properties.[9] Such a policy has not been introduced in most Australian jurisdictions except for the ACT. Coalition Senators do not support a policy that will only have short-term benefits for renters.

Other factors contributing to rental supply pressures

1.14High rental demand is also being driven by international migration since the re-opening of Australia’s borders. Net overseas migration was driven by a large increase in arrivals, up 103 per cent from last year.

1.15The Albanese Labor Government’s plan to bring 1.5 million migrants to Australia over five years, without a plan to house them, will only exacerbate the existing housing and rental crisis. By their own account, Labor's Housing Australia Future Fund proposes to construct merely 30,000 homes within that period, falling considerably short of the anticipated need.The Committee heard evidence that the net migration increases between 2023-28 requires approximately 250,000 additional dwellings.[10]

1.16Sustainable Population Australia highlighted the detrimental impact of increased migration intakes on the rental market:

The Albanese Government appears to be committed to a ‘Big Australia’ policy of rapid population growth, which will only serve to exacerbate the existing rental affordability crisis.

This financial year, net overseas migration will swell Australia’s population by 350,000, far surpassing all previous records.[11]

1.17Skill and trade pressures also significantly influence heightened rental demand. The Housing Industry Association detailed to the Committee that rising costs in construction, repairs, and renovations are curtailing the availability of suitable rental stock:

The additional costs to build have gone up on average by 20 per cent. In Sydney that's adding, say, $130,000 to an average build.

[Trade and material] costs in particular have gone up very significantly because of supply chain issues, and they don’t tend to come back down.

We still remain with some of the most acute skills shortages and trade shortages for the amount of work that's out there. The reason is partly COVID and the amount of work that's been going on since then, but we've also seen a significant drain of skilled labour into infrastructure projects. Renovation projects, even though new home sales have really fallen off a cliff, have continued to grow quite substantially. The draw on skilled labour is still very significant, and so we're still at close to the lowest levels of the availability of skilled labour that we've had in our history.[12]

Disincentivising vacant properties

1.18Injecting new supply to the housing market is of little utility if supply remains underutilised. Disincentives should be considered to address ongoing vacancies in our property market.

1.19The 2021 Census revealed that over 1 million dwellings remain unoccupied nationally.[13] The Committee heard evidence that as at 1 July 2023, the national residential property vacancy rate was 1.3 per cent, with some capital cities approaching 1 per cent.[14] The Committee further heard evidence these rates are ‘very low’ and exacerbate the challenges marginalised communities face within the property market.

1.20With such low vacancy rates, urgently freeing up additional stock is imperative.

Conclusion

1.21The Coalition members call upon the Albanese Labor Government to address the issues raised above as a priority and acknowledge that their migration policy is adding further pressure to a housing system that is stretched to its limits.

Senator Maria Kovacic Senator Kerrynne LiddleSenator Wendy Askew

Footnotes

[1]Real Estate Institute of Australia, Real Estate Market Facts, June Quarter 2022.

[2]Anglicare Australia, Submission 100, p. 4.

[3]St Vincent de Paul Society, Submission 125, p. 3.

[4]The Salvation Army, Submission 17, p. 20.

[5]Mr Lynton Sheehan, Executive Manager, Housing and Homelessness Services, Woden Community Service, Proof Committee Hansard, 30 August 2023, p. 19.

[6]Mr Hayden Groves, Real Estate Institute of Australia, Proof Committee Hansard, 30 August 2023, p. 46.

[7]Mr Hayden Groves, Real Estate Institute of Australia, Proof Committee Hansard, 30 August 2023, p. 46.

[8]Mr David Bare, Executive Director, Housing Industry Association, Proof Committee Hansard, 24 August 2023, p. 55.

[9]Productivity Commission, Submission 148, pp. 10–11.

[10]Committee for Economic Development of Australia, Submission 33, p. 1; Institute of Public Affairs, Submission 60, p. 2.

[11]Sustainable Population Australia, Submission 67, pp. 2–3.

[12]Mr David Bare, Executive Director, Housing Industry Association, Proof Committee Hansard, 24 August 2023, p. 54.

[13]Australian Bureau of Statistics, Census of Population and Housing: Housing data summary 2021: Table 1 – Dwelling Type by State and Territory, 28 June 2022.

[14]SQM Research, Weekly Rents: Capital City Average, https://sqmresearch.com.au/weekly-rents.php?avg=1&t=1 (accessed 12 September 2023); SQM Research, Residential Vacancy Rates: National, https://sqmresearch.com.au/graph_vacancy.php?national=1&t=1 (accessed 12 September 2023).