Rising proportion of ‘forever renters’ requires policy rethink

The research, funded by the Australian Housing and Urban Research Institute, was undertaken by researchers from the University of Adelaide, University of South Australia, Swinburne University of Technology and McMaster University.

“The majority of Australian private renters don’t think they will ever be able to afford to buy their own home,” says lead author Professor Emma Baker, Director of the Australian Centre for Housing Research and Professor of Housing Research at University of Adelaide.

“This shows a significant shift for Australian renters, who are, in greater numbers than previously seen, conscious that the dream of home ownership may not be possible for them.”

The survey also found that only 19 per cent of private renters said renting meets their housing aspirations, while 78 per cent aspire to own their own home.

Titled Planning for a two-tenure Australia, the research revealed that 51.5 per cent of private renters rented because they did not have enough money for a home deposit.

Unattainable home ownership is not only an issue facing younger people.

“The rise of renting in Australia is a multigenerational phenomenon,” says Professor Baker.

“Between 2011 and 2021, the proportion of people renting in the private rental market has increased in all age brackets across Australia – from 20-year-olds through to people aged 80 years and older.”

Rental rates are expected to grow over the next 20 years, with overall home ownership forecast to fall from 67 to 63 per cent.

“To prepare for a future Australia where up to 60 per cent of renters expect to be lifetime renters, consideration of economic policies will be necessary for different sub-groups of renters – particularly those heading to retirement,” says Professor Baker.

‘The policy challenge is to make renting a good, long term, stable housing tenure for renters, particularly for lower-income, older renters with limited superannuation.”

There are homeowner-specific tax concessions that are not available to renters, such as the sale of a person’s primary residence not incurring capital gains tax, and the imputed rental income of owner-occupied housing being tax free.

Professor Baker has identified two groups of renters which could be targeted to create a fairer Australian housing and tax system – low to moderate-income households renting longer term, and ‘rent-vestors’, which are households that own property they rent to others while they themselves rent.

“To help these groups build resources to face renting in retirement they could be compensated through tax benefits on non-property investment opportunities, such as financial investment products, and superannuation,” says Professor Baker.

“This would also reduce the need for householders to ‘rent-vest’, which can be seen as a form of over consumption of housing that leads to higher house prices.”