A new study shows that although housing stress is beginning to ease for homeowners and renters, rising housing prices are still making it difficult for them to make ends meets.
The BCEC Housing Affordability Report 2019 revealed that more than half (52%) of private renters had difficulty paying for housing while 38% of homeowners did.
A study of households in Western Australia, New South Wales and Australia found that single parents and those with low incomes are the most affected.
Alan Duncan, one of the authors of the study, said that Western Australia’s rents remain high despite a weakening housing market. Around 20% of renters in Western Australia spend more than 40% of their income for housing. According to the study, Perth was found to be the most affordable Australian location for renters in terms housing costs. Renters account for 27% of Perth’s housing costs.
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He claimed that half of single parents with low incomes in Western Australia rent, and are living in housing stress. They spend over 30% of their weekly income for housing.
Duncan explained that the shortage of affordable rental properties in Western Australia meant that prices could not be adjusted to alleviate housing stress for many Australians.
Homeowners face less severe housing stress
The study was co-authored by Steven Rowley, Curtin University. He stated that low-income households would experience different levels stress depending on whether they have a property.
Two-thirds of mortgage-eligible households are eligible to make non-essential purchases once they have paid their mortgage. Only half of private renters will be able to make such purchases after paying rent. He estimated that housing stress affects about half the households with high housing costs.
Survey respondents in Australia stated that the biggest obstacle to homeownership was saving money for a deposit.
Rowley stated that Australians tend to underestimate how much they need to deposit. The government’s first buyer deposit scheme, which is three quarters of the respondents, was a necessary step in solving this problem.
He stated that home loans with low deposits are a great way for financially stable renters to make the transition to homeownership. Keystart’s success in Western Australia is one of the reasons Western Australia has higher rates that any other state.
Keystart is a government-backed scheme that provides low-income households with affordable loans for their homes in Western Australia.
There are not enough housing policies
Rowley urges state and local governments to consider further policy interventions such as the National Rental Affordability Schemes, (NRAS), that were scrapped in 2014. This scheme is intended to provide renters affordable housing.
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He stated that a policy that would encourage investors and community housing providers would allow for a subsidised rental market for households who can’t afford market rents.
Rowley stated, “Without government intervention many tenant may find it difficult afford rent either because of losing their NRAS entitlements (or rents beginning to rise again due the increased demand for housing).”
He said, however, that the problem is not a one-way street. He said that developers could play a role in ensuring housing affordability.
Direct housing units could be offered in affordable developments, he stated. Housing options that are affordable for all income levels could also be made possible by financial contributions or subsidies. If the government is willing to provide favorable conditions, private investment can lead to affordable, reliable and affordable ‘built-to-rent’ housing.