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Australia's rental crisis: These cities are the worst affected

·4-min read
Composite image of a house with a
Perth has the highest ratio of spare rooms per person. (Source: Getty)

The rental market in Australia has, for want of a more official word, gone crazy.

What does this mean in practical terms?

Rental properties are increasingly tricky to find, as the rental vacancy rate falls to its lowest level in decades - a miniscule 1 per cent - according to SQM Research.

And yet Australia has lots of spare space, if you know where to look.

According to the latest census data, Aussie homes have more spare bedrooms than ever. Even as working from home puts pressure on those spare bedrooms to step up and become home offices, we still have space to spare.

The most common housing type is two people living in a three-bedroom home (home offices all round), while the fastest-growing house type is two people living in a home with four or more bedrooms.

That’s a lot of space for studies and home gyms or, of course, piled up boxes of stuff that haven't been opened in years.

Graphic with information about homes with spare rooms.
(Source: supplied)

One thing the data tells us is that when you look at all the 4+-bedroom homes in Australia, they are more likely to have two people in them than four people. It’s a sign we are a rich country with resources

Where are the houses?

But where are these houses with all the spare bedrooms?

The short answer is they aren’t in Sydney’s west, where there is less than one bedroom per person, on average, as the next map shows.

There are quite a few families whose kids – possibly including adult kids - share a bedroom in southwest Sydney.

Graphic with information about homes with spare rooms.
(Source: supplied)

So, which capital city has the most spacious ratio of bedrooms to residents? Perth. Especially up north where there are some newer developments.

Graphic with information about homes with spare rooms.
(Source: supplied)

It’s easy to assume spare bedrooms linger unused in the houses of the wealthy. I imagine long corridors leading to dusty rooms that nobody has bothered to visit in years, but the data doesn’t confirm that.

Surprisingly, it’s middle-income areas that have more spare bedrooms than the lowest-income areas, but higher-income areas don’t usually have more than middle-income areas.

It seems wealthy people don’t buy more bedrooms, they just buy the same number of bedrooms in more expensive areas.

Graphic with information about homes with spare rooms.
(Source: supplied)

The map of Perth gives us some clues as to where these houses are.

Some are in new housing developments where a young person or young couple might have moved before starting a family. But by far the biggest stash of empty bedrooms is at the other end of the demographic spectrum, as the next chart shows.

Graphic showing the ratio of spare rooms per person by age.
(Source: supplied)

The data in these charts come from the census, and they don’t tell you about individual houses (there would be privacy concerns). But this information can provide a pretty good idea of what’s happening by comparing the average age in an area to the average number of bedrooms per person in an area.

There’s an upwards slope evident in every state - that tells us who is sitting on the largest number of empty bedrooms: empty nesters.

Most Australian states levy taxes on buying and selling homes, called stamp duty. That’s a huge money-maker for state governments, but it means people avoid moving house if they can. Why pay the government $60,000 in stamp duty tax just to move house when you can sit tight?

So, older people don’t tend to downsize when they should, even after tending the garden gets harder than it once was, and even if their kids are worried about them going up and down those stairs.

States know stamp duty helps trap people in housing that doesn’t suit them.

NSW is proposing changes to stamp duty in 2022, making an annual payment an option instead. But that is only for first home buyers, so it won’t free up all those spare bedrooms.

The ACT is also pursuing a 20-year fade-out of stamp duty, starting with first home buyers.

Australia doesn’t necessarily have a housing-supply problem, it has a housing-matching problem.

Young families are stuck trying to rent two-bedroom places when they’d rather buy four-bedroom places.

If we can get the right households into the right homes, we have a better chance of making space for everyone.

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