“Rent assistance should be the priority. It’s a really effective program in reducing financial stress and poverty among low-income earners at a time when rents are expected to ratchet up,” Mr Coates said.
Described as the “most effective form of short-term rent relief”, a 22 per cent increase would provide about one in three renters an additional $1000 annually compared with two years ago. It would also reduce headline inflation by about 0.1 per cent due to CPI accounting for how rental assistance reduces net rent for households, Mr Coates said.
Rent assistance only a Band-Aid fix
Leanne Pilkington, Real Estate Institute of Australia president, also called for greater rent assistance, but warned it would only serve as a Band-Aid to Australia’s rental crisis so long as there was a housing shortage.
“The Commonwealth needs to make sure rental assistance is in line with rental increases, but that doesn’t fix the lack of housing,” she told The Australian Financial Review. “While it helps tenants, it doesn’t put supply into the system.”
Australia’s richest developer, Harry Triguboff, said the government needed to take more accountability of its housing targets if it wanted to slow rent increases. He said builders needed more confidence to start new home builds amid high construction and finance costs.
“The banks have to make finance more accessible for property developers as well as buyers,” Mr Triguboff said. “With construction costs and finance costs today, builders can’t build and make a profit. This should be very easy for politicians to understand, who can easily work out the costs and the achievable prices with their staff, but they refuse to do so.
“At the moment, it looks as though the cabinet will do nothing except promise a great number of apartments, which is also promised by the state government.
“They all say that, but very little action is being taken. But this should not be the case, and it is urgent that we set housing targets that must be met now.”
The Property Council of Australia said rental vacancy rates had dropped to about 1 per cent, which was much lower than a 3 per cent healthy vacancy rate.
At the same time, the pace of Australian home building has slowed to a decade low despite demand growing, as higher borrowing costs and rising prices have pushed investors out of the sector. New housing starts fell to 165,602 over the four quarters to September, the weakest 12-monthly total since March 2013, Australian Bureau of Statistics figures showed.
Rob Furolo, an executive of Sydney developer Deicorp and a former NSW Labor MP, said the federal government needed to do more to convince investors to allocate capital on home starts at a time of high borrowing costs and rising material prices.
“Higher vacancy rates would actually be the most valuable thing that could happen for renters to reduce the pressure on rent prices. But that’s going to need more properties to be constructed and more investment,” Mr Furolo said.