By Jim Malo and Tawar Razaghi
Melbourne’s housing crisis has deepened as asking rents for both houses and units hit another record high, prompting tenants, housing advocates and the real estate industry to clamour for solutions.
Asking rents for houses hit a median $570 per week in the March quarter, up 3.6 per cent on the previous period and 14 per cent year-on-year, the latest Domain Rent Report, released on Thursday, shows. For units the median was $550 – up 5.8 per cent on the three months to December and 14.6 per cent up when compared to the March quarter last year.
The vacancy rate was an ultra-low 0.8 per cent; the same as this time last year, but down from the December quarter’s rate of 1.2 per cent.
Domain head of research and economics Dr Nicola Powell said growth previously appeared to be slowing, but had picked up pace over the typical “changeover period” the rental market experiences in summer.
“There’s a re-acceleration of rental growth,” she said. “It is a seasonally strong quarter, we knew it would be the most competitive Melbourne renters have seen … but the belief is that momentum is still being lost, in terms of that annual growth.
“The vacancy rate is still very low, so we won’t be moving into a period where rents are going to decline, but what we’re doing is moving away from the insane rent growth we were experiencing.”
The persistently low vacancy rate and still-rising rents have left tenants with little power to effectively navigate the rental market, particularly those on lower incomes.
Renters’ and Housing Union member Summer Gregory became homeless after her relationship with her property manager deteriorated over about six months.
The rift began when she missed a rent payment, but soon escalated to the agency threatening to change locks despite Gregory having repaid the late rent, she said. At one stage, Gregory was $4 in arrears when she was threatened with eviction.
“I remember paying it while walking to the train station thinking: this was all over $4?”
The incident culminated in a Victorian Civil and Administrative Tribunal hearing in which the member told the agent their communication with Gregory had been inappropriate, according to notes taken by Gregory in the hearing.
The stress from the saga worsened the symptoms of Gregory’s illnesses, which made her less able to work and earn money. Towards the end of her stay in the Reservoir rental she attempted to have a second tenant approved to live in the two-bedroom unit to help her cover the rent.
Gregory only paid half of the month’s rent in anticipation that her choice of housemate would be approved; she was instead accused of illegally subletting and had her request denied because the proposed housemate wasn’t working full-time and was receiving Centrelink assistance.
She was soon given another notice to vacate with a deadline of later this month. Gregory left early instead, and said she has not paid the other half of the month’s rent.
Summer Gregory has been couch-surfing at a friend’s home since being evicted. Credit: Darrian Traynor
“I said, I’m choosing to feed myself instead of paying rent.”She is now couch-surfing.
“I’m happy to go to VCAT again. I know I have rent in arrears and that has to be dealt with,” she said. “I’m not trying to run away from my problems.
“I feel like the power over me was abused.”
Renters’ advocate Jordan van den Berg, known for his spirited criticism of landlords and real estate agents on social media, said he was appalled by reports that tenants unable to pay rent were being evicted into homelessness.
He recently came under fire on social media for suggesting that rough sleepers could squat in abandoned properties to secure a roof over their heads.
“The reason behind this is that people are being made homeless while we’ve got empty homes,” he said. “I wouldn’t say it’s a solution by any stretch of the imagination.”
Squatting is legal in Australia but gaining access to a locked property is considered breaking and entering, which is illegal. A squatter must leave a property if asked by the owner; otherwise they can be considered a trespasser.
Centre for Independent Studies chief economist Dr Peter Tulip said he was not against the use of legitimately vacant homes by people who were sleeping rough.
“If there is a vacant house somewhere then I’d prefer people sleeping in that than sleeping under a bridge or in a tent. Neither of those are at all a satisfactory solution,” he said, but added this opinion hinged on why each home was vacant.
A more acceptable, long-term solution would be to increase the supply of housing, Tulip said.
He said the long-running shortage of homes had allowed landlords to fill almost any property at much higher rents than they otherwise could charge with ease.
“The failure to build enough houses is the fundamental explanation for the shortage,” Tulip said.
Real Estate Institute of Victoria president Jacob Caine agreed. He noted that the construction of public housing had been declining since the end of the post-war period, when the nation added about 15,500 public homes annually.
“They say the data reflects there’s a shortfall of something in the vicinity of 250,000 homes today,” he said. “If we had built [public housing] at the rate of the ’50s and ’60s, homelessness wouldn’t be a thing.
“From our perspective that is something that absolutely needs to be reversed.”