Some students are resorting to sleeping in tents in friends’ lounge rooms as skyrocketing rents, rising interest rates and signs house prices are going up again, leave young people facing a growing property affordability crisis.
Many fear they could be locked out of home ownership permanently and paying an excessive percentage of their income on accommodation instead.
New data from Everybody’s Home, a national housing campaign, has shown rental prices in Sydney have risen up to 15 per cent in the last quarter alone.
It’s left young people stressed about not being able to afford either to buy a first property or rent one, with a Sydney University report finding 40 per cent of 25-35 year olds are seeking parental assistance to get a mortgage.
Niki Trifon, a 23-year-old from Sydney, has faced the brunt of the property crisis, finalising her second rental only a month ago.
Trifon and her dog Lola outside her new property.
“It was quite stressful even though it was our second time entering the rental market as the first time, it was right at the end of lockdown… so places were available and were pretty cheap. This time, there was a line down the street and everyone was stressed,” she told Central News.
‘This time, the real estate agent was stressed, buyers were stressed and it made the experience a bit of an anxiety inducing one.”
Rate increases across Greater Sydney have grown exponentially since the decline of COVID-19. The Everybody’s Home Report found Sydney’s Lower North Shore had the highest quarterly change in weekly rent with a 14.3 per cent increase.
And increases have left no area of Sydney unaffected. Suburbs ranging from Sutherland to the Northern Beaches, and as far west as Liverpool have all copped a quarterly rate increase of over 5 per cent.
During peak periods of COVID-19, Sydney saw vacancy rates triple with roughly 30,000 properties available. Since the decline in COVID-19 restrictions, pandemic living habits have remained as tenants opt for sole living spaces over shared homes. Sole home ownership coupled with international borders reopening to migration has been reflected in vacancy rates decreasing to pre-COVID levels.
From an all time high of 4.9 per cent vacancy across Sydney in 2020, the vacancy rate has decreased to 1.3 per cent in 2023, accounting for 9,000 properties. This decrease comes while demand for home ownership continues to rise.
Trifon found housing availability and quality was a clear issue at inspections.
“The rental market was horrible in February and March. There were two scenarios when it came to inspections. Either there would be a line of a billion people or you would enter a property alone but it looked nothing like the photos,” she said.
The Grattan Institute economic policy director Brendan Coates said he was concerned for current renters.
“Life’s tough if you’re a renter right now. 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.
The National Housing Finance and Investment Corporation’s Housing Report 2022-23 found 80 per cent of individuals earning less than $21,000 were spending more than 30 per cent of their income on rent. In the same report it found only 1 per cent of individuals earning over $200,000 were spending more than 30 per cent of their income on rent. With young renters making up a large portion of low income households, it’s a matter of being able to pay rent or afford food for the week.
Rent and mortgage stress has manifested in alarming statistics. In Metropolitan Sydney, roughly 9.7 per cent of mortgaged households were under mortgage stress and about 25 per cent of rented households were reported as under stress.
Some international students affected by rental prices have resorted short-stay accomodation. For Zoe Jiang, a Chinese international student, a short stay accomodation with no room of her own had her resorting to pitching a tent in her friends apartment.
“It’s a fresh experience, and I think camping in a living room is very different,” she said.
Income stress and housing availability isn’t only affecting young renters however, as owning a home is only half the issue in Sydney.
“I checked both the Real Estate app and Domain app everyday which had my preferences saved. Prices are quite high but I’m glad we found somewhere where we are happy living; it is more than what we paid for our first place but now everything is OK,” Niki said.
The HIA Affordability Index found in the December quarter last year that mortgage re-payers in Sydney were spending over 60 per cent of earnings on repayments. Other capital cities including Perth and Adelaide had lower repayments between 30 per cent to 50 per cent of individuals total earnings.
Sydney may have to look to other global cities and how they manage the challenge of the property crisis and model a way forward. In London, mandatory inclusionary zoning has forced affordable housing into projects. In Singapore, public housing has opened up home ownership to over 80 per cent of citizens.
Economist Cameron Murray is hopeful replicating other countries’ methods will provide support for the younger generation to enter the property market.
“In Singapore, the government can just build houses like any other property developer and sell them to first-home buyers at a discounted price. A system like this is the answer,” he said.
Services Australia provides rent assistance schemes for those eligible on behalf of the Australian Government. For those seeking private rental assistance, Haven Home Safe provides one-to-one support for those facing the brunt of the housing crisis.
Main image by Tom Rumble via Unsplash.
