Rents are tipped to keep rising in 2023.Credit:Peter Rae
He said the pandemic caused Australians to value having their own,larger space,which meant more homes were occupied.
“In the short term you’ve got a big increase in demand with migration going up against a static supply,so in the short term rents will keep going up,” he said.
Coates is also concerned about the effect the crisis will have on low-income Australians.
“A tight rental market means renters will be spending more of their incomes to keep a roof over their heads,which means they can’t spend as much money on essentials,” he said.
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“We see rising rates of homelessness with rising rents. That’s the consequence.”
Centre for Independent Studies chief economist Dr Peter Tulip echoed the Grattan Institute’s concerns.
“One of the big effects on society is that higher housing costs are making Australia more unequal.
“That high housing costs hurts lower income earners because they tend to be renters while benefiting the wealthy because they own the housing. This is a major factor driving inequality in Australia.”
Tulip said the rental crisis would drive more hardship for lower income earners.
“The bigger division is not the kind of housing you have,but it’s where you’re located,” he said.
“The single biggest cause of homelessness is high rents … We are seeing growing homelessness,it’s obviously not by choice,people are being squeezed and left without an affordable alternative.”
Igor Silva was renting with two other housemates in Blacktown last year when he received notice his rent was going to increase.
Igor Silva purchased his first home last year just before rents went up for him and his housemates.Credit:Kate Geraghty
He was already searching for a place of his own amid the falling property market,and took out a no-deposit home loan thanks to a family member who agreed to go guarantor.
The 30-year-old eventually bought a unit in Wentworth Point,originally for the same mortgage repayments as his rent. He is relieved he tapped out of the rental market just as his rent was going to increase.
“The minimum apartment rent went up from $600 to over $700 a week. I kind of just stopped renting in the nick of time,” Silva said.
“In terms of mortgage repayment,it’s definitely more than rent now. I do think the mortgage rose more than the rent.”
Silva and his housemate were each able to buy their own homes faster than their third housemate could find a new rental.
Silva’s mortgage broker Samuel Philipos of BFG Loans has noticed more people trying to enter the property market as rents skyrocketed last year.
He said one family who were hoping to buy are chipping away at their deposit to cover rent. They have not been able to purchase because rising rates reduced their borrowing capacity.
NSW Tenants’ Union chief executive Leo Patterson Ross said Sydney’s rental market is in a permanent state of crisis that is almost created by design.
“People are very desperate and there are not enough options,” Patterson Ross said. “Is it this hard to access water or energy? Would we think it’s OK? We wouldn’t.
“Are people able to find a home? When the answer is no for so many people we clearly have entered this permanent state of crisis. It’s almost a designed state of crisis – it’s supposed to work this way.”