I was involved in a conversation yesterday about the Affordable Housing Crisis and the ‘benefits’ that may result. (Yes, benefits)
I wondered aloud if the Housing Affordability issue may result in a positive societal change.
Australian’s are brought up under a doctrine of being home owners. In a by gone age, the 3 bedroom, brick veneer, garage, lawn, Holden in the drive way and Victa lawn mower in the shed was the Australian Dream.
We live in a world where Home Ownership is a sign of success and stability and by definition, not owning a home is a sign of the opposite.
If this notion applied to New York City, successful Investment Bankers, Accounting Executives, Interior Designers and many others would be deemed, well, less successful and less stable.
New York is a City of renters, with rentals making up two thirds of housing stock.*
Is Sydney to become as City of renters?
Australia is becoming a Country without State Borders. Moving Intercity or Intrastate or work and career opportunity is common among Graduates and those growing, or diversifying a career. Why not rent and invest surplus cash flow in other areas?
The quality of rental accommodation has improved in New York to an extent where you get all the modern facilities and amenities once the preserve of the owner occupier. This is happening in Australia too as inner city apartment blocks come on line.
Needs change – the renting young professional couple make the decision to start a family and the single bedroom rental apartment of the last five years gives way to a suburban dwelling: it may even be purchased. The sheer transactional cost of buying and selling and buying again is yet another argument for renting.
Except for one thing; 5 years.
In this country, the 6 month lease is standard, providing little or no ‘occupation security’. Renters are subjected to regular market moves and are at the whim of the landlord who may think a few extra dollars can be squeezed out of their investment by going to tender regularly.
Maybe the solution to our housing crisis is to first reform our rental regulations providing more security of tenure to ‘solid’ tenants. The key element would be longer term leases. In addition some control over rental rates would provide confidence to the renter to make their residence a home while also providing more security of regular income to owners, be it at the expense of big increases in high demand, but less risk of non-occupancy.
However, perhaps a change in the Great Australian Home Ownership Dream has to also take place.
.*Reference: Jonathan J. Miller, President and Chief Executive Miller Samuel) in New York Times Article 19 May 2017)