The private rental sector has expanded dramatically over the last two decades — at more than twice the rate of increase in Australian households. This increasingly diverse form of housing is now home to one in four Australians.
The insecurity tenants feel, as a result of Australia’s lightly regulated private rental sector, is a key factor in why most Australians aspire to own their home. However, despite this insecurity, research by The Urban Developer suggests an increase in people choosing to rent for a long time —ten years or more— accounts for a small part of the growth in private renters.
With much of this growth attributed to middle and high-income tenants, it’s an interesting move that is reflecting a number of issues seen across property markets in Australia.
For families with children, renting can be the far more affordable option — especially if they want to live in certain school catchment zones. Gabrielle* and her partner earn well and live in a high-rent area in Sydney, but explained to The Urban Developer that they would struggle with paying a mortgage as it would compromise their families lifestyle:
“Sure it [home ownership] provides you with security and you don’t have that stress of […] having to move. I get that, but at the same time, you know for us, for example, if we wanted to buy we’d be paying four times what we pay at the moment in a mortgage […] It doesn’t really make financial sense to go and do that […] You’d have to live somewhere. So I choose to live in a nice area where my children are [at school].“
They also did not want the burden of a large mortgage:
“[…] I have no desire to put myself in a position where I have a $2 million mortgage and have to work for the rest of my short life to pay for it […]“
For others, renting means they can come and go as they need. After all, as long as they’re making payments on time and keeping the property in good shape, many are finding that leaving the rest of the worries to others is good for their stress levels.
Buying a home is a long-term commitment, in more ways than one. Owners are responsible for the upkeep of their home, which can mean losing weekends to weeding the garden or organizing the plumber for unexpected leaks or breakages throughout the property. While you still may do these things if you’re renting, it’s more likely that you’ll be able to work with the property owner so that the leaky faucet is fixed when you get home.
An increasingly common type of renter is known colloquially as a “chooser”. They place value on the freedom to move or travel at will, and prefer their homes not to keep them ‘stuck’ in a certain location. This way, renters can move to be closer to work/family/friends/etc., and also their needs and wants evolve.
The Urban Developer asked renters for their thoughts on why they choose this flexibility, and there were some interesting responses. Patricia*, who lives in a high-rent part of Melbourne, has rented consistently since she moved to Australia in 1977 because she wants her money to work for her in a way that suits her lifestyle:
“I just travel anywhere and everywhere. I thought […] if you’ve got a house you’re stuck there, and I thought, no. I work hard for my money, so that money that I work hard for is for me, not to have a [permanent] roof over my head. […] Renting has been good for me because I can still do what I want,” she said.
Although this isn’t the lifestyle for everyone, it is becoming an increasingly popular option. With this in mind, many investors are entering the market with the goal of capturing these types of tenants. As The Urban Developer notes, “most of the choosers rented in desirable inner suburbs of Sydney and Melbourne, which would otherwise be inaccessible”.
This article was adapted from an original post by The Urban Developer.
*Names changed for anonymity