Sydney house prices have grown at twice the rate of incomes over the past 20 years, leaving today’s first home buyers in a near-impossible situation, experts say.
But it’s another part of the housing affordability equation – rent increases – that policymakers are being urged to look at.
For most moderate and low income households the rental market is now “where they’ll be for the rest of their lives,” according to University of Sydney chair of urban and regional planning and policy, Peter Phibbs.
“If you’re a potential first home owner trying to save for a deposit … you’re paying rent and that rent is escalating,” Professor Phibbs said.
“The problem is that house price inflation earlier in the century connected with pretty fast-rising incomes, now incomes are really rising between 1 and 2 per cent and house prices are going up by 10 per cent and if you’re trying to save for a deposit you just can’t get there.”
Four years ago, Candice McLaughlin, 29, and her fiance, started renting in Picnic Point for $500 a week. After their lease ended, the landlord put the rent up $50 – a 10 per cent rise.
Her most recent home, in Earlwood, was rented at $610 a week – which the couple could afford to pay with a roommate.
“Now the rent has gone up to $630 a week. [The landlord] said the area is valued at more … so we’re moving again,” Ms McLaughlin said.
“We are desperate to buy our own house but when you’re paying $600 a week in rent the hardest thing is getting a deposit … You have to fight to get a property and once you have it at the end [of the lease] they jack up the rent”.
They’re not alone – data from NSW Housing, Domain and the Australian Bureau of Statistics shows house prices and rents have outpaced income growth. Sydney’s median house price is now above $1.1 million.
The average weekly earnings in NSW grew 4.3 per cent annually over the past 20 years on a compound annual growth rate, but house prices went up 8.3 per cent and rents jumped 5 per cent.