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AUSTRALIA’S ANNUAL RENT BILL BLOWS OUT BY $44 BILLION PER ANNUM OVER THE LAST DECADE
AUSTRALIA’S ANNUAL RENT BILL BLOWS OUT BY $44 BILLION PER ANNUM OVER THE LAST DECADE
Kevin Young, President of Property Club, Australia’s largest independent property investment group, has highlighted a concerning trend regarding the financial strain faced by renters across Australia. According to Mr. Young, a government-engineered rental crisis has resulted in an additional $44 billion per year being imposed on renters nationwide.
Over the past decade, the median weekly rent in Australia has doubled, skyrocketing from $300 to over $600. This exponential increase means that Australian renters collectively shell out nearly $250 million in rent every day. Meanwhile, full-time adult average weekly earnings have only risen by 30 percent during the same period, reaching $1953. This stark contrast illustrates that rents have surged at more than three times the rate of wage growth.
Mr. Young points out that this rental crisis is especially burdensome for low and middle-income renters, who struggle to keep up with rising rents amid other cost-of-living pressures. He predicts that the situation will worsen with a significant influx of migrants to Australia, exacerbating the housing demand-supply gap.
To swiftly address the rental crisis, Mr. Young proposes two key policy reversals by the Federal Government. Firstly, he calls for the reinstatement of depreciation benefits associated with owning second-hand properties, which were abolished in 2017. This change disincentivized property investors from purchasing cheaper second-hand rental properties, thereby reducing the availability of affordable rental options.
Secondly, Mr. Young urges the Federal Government to reintroduce interest-only lending without time limits for property investors. The imposition of time limits on interest-only loans by the Australian Prudential Regulation Authority in December 2014 forced many mom-and-pop property investors to sell their rental properties, as they could not afford principal and interest loans after being forced to switch repayment methods.
Mr. Young warns that without prompt action, rental prices will continue to soar, potentially driving thousands of Australians into homelessness. He emphasises the urgent need for the government to reverse these detrimental policy decisions to prevent the rental crisis from escalating into a nationwide homelessness crisis.
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