Biggest expense for many households blows out

“This allows landlords to be less competitive when they’re posting their rental price.”

She said although all households have been dealing with inflation, renters have fewer options compared to home owners who can refinance their mortgages or access their equity.

A higher vacancy rate could help, whether through building more homes or tenants moving back into shared housing, she said.

Curtin University professor of economics Rachel Ong ViforJ said rents started to lift once lockdown-era supports such as moratoriums on evictions came to an end.

“We live in a rental market where it’s a very much a market-based system. If landlords are subject to temporary regulations, when they are lifted, they will actually seek to recoup what they perceive to be their losses,” the John Curtin Distinguished Professor in the School of Accounting, Economics and Finance said.

Tenants are in the private rental market longer than in the past and find it hard to purchase a home, meaning security of tenure was an issue, she said.

Different states had been starting to respond, such as by moving to limit the number of rent increases or allowing pets. Another solution would be to diversify the sources of private rental properties by developing more ‘build-to-rent’ properties, where large institutional investors own entire apartment towers and are more resilient to changes in housing market conditions, she said.

“But there are some immediate concerns for people who are in severe rental stress and that’s not something that’s going to be solved by me saying ’we just need to invest more institutionally,” she said.

For example, the last budget increased Commonwealth Rent Assistance by 15 per cent.

“Fifteen per cent is really not enough to catch up with the significant increase in cost of living that low-income renters have.”

Better Renting executive director Joel Dignam said there was not necessarily a reason for asking rents to be linked to wages.

“It’s partially about what tenants can afford to pay, but it’s also about what landlords can get away with demanding,” he said.

“People end up spending more of their income on rent and if you’re on a low income that leaves you with less left over.”

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He said housing costs were the biggest expense for many households, especially on lower incomes.

“There’s a pretty grim picture,” he said. “A lot of Australians are under pressure these days in terms of the household budget.

“Even a 10 per cent rent increase, that’s a lot of money.”

Tenants are having to accept a lower standard of housing offered by landlords, he said.

“In a better functioning market they’d feel a lot more pressure to make sure their properties were at a better standard.”

Solutions could include more public housing and looking at planning laws to increase the supply of housing, he said, adding it was important to consider protections for renters in the meantime.

The ACT, for example, has moved on banning no-cause evictions and limiting the size of rent increases.

“A shift we’re seeing here beyond the policy shifts is more of a government appetite to act on housing affordability,” Dignam said.

“Boomer parents who have renting children can see the system is not working.”