Thursday, September 4, 2014

The changing shape of the rental market

Judy Yates, leading housing researcher and friend of the TU, has kindly given us a couple of graphs that show the changing shape of the Australian rental housing market. As we've said before, understanding the changing shape of the rental market is crucial to really understanding affordability problems. Yates's graphs update the picture to the 2011 Census.

Graph 1 gives us pictures of the rental market at each Census back to 1991, according to the weekly rent of properties (in $2011 – that is, the figures for previous Census years have been adjusted in line with inflation). In this graph, as you move along the range of rents (from left to right), the line for each year rises, until all properties in the market are accounted for.

(Graph 1. Cumulative rent distribution, 1991-2011. Source: Yates.)

Let's start by looking at the line for 1991 (darker blue). At the $200 per week mark, the line sits a bit above 50 per cent; this means that a bit more than half of all rental properties were let for $200 per week or less. Moving along the range of rents, we get to the $300 per week mark, by which time over 80 per cent of the market is accounted for. At the $400 per week mark, about 90 per cent of the market is accounted for. Less than 10 per cent of rental properties in 1991 were let for more than that amount.

Now look at the line for the next Census year, 1996 (lighter blue). It closely follows the line of 1991; not much change over this period. Looking at 2001 (red), we see some change has occurred: at the $200 per week mark, the line is lower, meaning the percentage of properties let for $200 per week or less has dropped (to about 50 per cent). Same story at the $300 per week mark.

Looking at 2006 (lighter green), we see further change, more pronounced this time. The percentage of properties let for $200 per week or less has dropped to about 40 per cent; the percentage let for $300 per week or less has dropped to a bit over 70 per cent.

And by 2011, there's further change, and it is very pronounced. The sub-$200 per week part of the market has dropped way down to less than 30 per cent of all properties (20 years previously, it was more than half the market); the sub-$300 per week part is down to just over half (20 years previously, it was more than 80 per cent).

There goes the low-cost end of the rental market. We can see the change even more clearly in graph 2, which compares the rental market of 2011 to the rental market of 2001. Like graph 1, it adjusts 2001 rents for inflation; unlike graph 1, which cumulatively put together all the parts of the market as you moved up the rental scale, graph 2 shows what has happened to each part along the scale.
   
(Graph 2. Rent distribution, 1991-2011. Source: Yates.) 

It shows that in 2001 (blue line), properties going for about $200 per week were very common – they comprised almost 30 per cent of the market – and properties let for about $400 per week were rare (about 10 per cent). In 2011 (red line), it is the other way around: now $400 per week properties are common (25 per cent of the market), and properties going for $200 per week are rare (only six or seven per cent of the market).

Also, looking at the ends of the market: in 2001, there were a few properties – not many, but a few (five per cent) let for about $100 per week; in 2011, there are next to none. In 2001, there were very few properties at $800 per week; in 2011, properties at $800 per week and $1000 per week are now quite solidly represented.

Yates and her colleagues have got some research coming out soon from AHURI that shows the changing shape of the rental market in even more detail. We'll keep you posted.

4 comments:

  1. Would be interesting to see a comparison on how this compares to the cost of buying a house and how the differences in average incomes over these time periods reflect as well.

    ReplyDelete
  2. Fair point, Anon. Yates's forthcoming research will look at incomes.

    But for the moment, look on that bulge in the rental market, shifting hugely from $200 pw to $400 pw, and ponder what it means for low-income households.

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  3. Hi, i am a low income earner- the rent i pay is more than most peoples mortgage payments
    I was given a retalitory eviction notice last week because i protested the landlord removing asbestos without a license
    My son and i have no where to go and no money to get there
    My son starts the HSC in one month
    I am seeking legal advice- surely, i shouldnt have to have my child and all of the residents around here breathing asbestos without flagging it?????

    ReplyDelete
  4. Hi Kam

    Very sorry to hear you're having such a stressful time.

    As the graphs show, the rental market doesn't give low-income earners many options. But you may have some options under the law.

    About the retaliatory termination notice - please talk with your local Tenants Advice and Advocacy Service (link under 'Need advice?' in right sidebar) about your options. You can talk with them too about your options re the asbestos.

    Best of luck

    Chris M

    ReplyDelete

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