Home Insights As Aussie rent prices continue to surge, homelessness could get worse

As Aussie rent prices continue to surge, homelessness could get worse

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Over the past year, posted rents have grown rapidly, Prices rise 7% nationwide In a tight market, limited supply and low vacancy rates.

While these situations clearly put a strain on tenants, the rent crisis could also put significant pressure on another group: those at risk of homelessness.

Rent pressure is putting more people at risk of becoming homeless.Photo: Getty

About 1 in 200 Australians are homeless

Over the past 20 years, the homelessness prevalence in Australia has changed little.

Roughly speaking, about 1 in 200 people is homeless, and that number has been around for some time.

The prevalence actually declined in 2006, but rose again over the next decade, returning to roughly the same level as in 2001.

We don’t have frequent or recent data, as homeless numbers are difficult to measure. [1]

The best data we have comes from the Census, and while some data from the 2021 Census has been published, homeless estimates have yet to be published. So the best estimate we have is over 6 years ago. [2]

Most homeless people are young people, and the prevalence of homelessness among young people is increasing. Nearly 60% of his homeless in 2016 were under his 34.

Between the 2011 and 2016 Censuses, the homeless rate among 19- to 24-year-olds increased from approximately 1 in 120 to 1 in 105.

Importantly, the homeless are broader than the sleep-deprived population.

In fact, only a small percentage (7%) of homeless people get a rough night’s sleep.

Rather, most people experiencing homelessness live in supported accommodation (18%) or boarding houses (17%), or are temporarily staying with another household (15%), or Overwhelmingly live in “very” crowded housing (44%). [3]

The causes of homelessness are complex, but high rents are a key factor

Many things lead to someone becoming homeless. This is a complex issue and in most cases no single factor is to blame.

Rather, it is the confluence of individual factors When Structural factors such as expensive or inaccessible housing leading to homelessness (O’Flaherty 2004) – often become the “wrong person in the wrong place”.

However, from a housing policy perspective, one finding stands out. Expensive housing and a tight rental market make homelessness more likely.

Colburn and Aldern (2022) Briefly:

“This is not to suggest that poverty or mental illness are not risk factors for losing housing. Indeed, the lower your income, the more likely you are to be homeless … The point is clearly It is these individual vulnerabilities that are risk factors to: For example, the consequences of being poor in Seattle are very different from those in Cleveland.

This is not an isolated discovery.Another US study (Fargo et al. 2013) found that “rental housing market factors, particularly housing costs, are the strongest predictors of homelessness.”

Further research shows that lower rental vacancy rates are associated with higher rates of homelessness, as are higher rents. (Quigley and Raphael 2002). [4]

When Hanratty (2017) Even when region-specific factors are taken into account, we find that higher rents are associated with higher prevalence of homelessness. [5]

The homeless describe a variety of scenarios, including living in shelters, relying on makeshift accommodation, and couchsurfing.Photo: Getty

Studies in Australia are scarce, in part because geography makes it difficult to study homelessness. With far fewer cities than in the United States, it’s difficult to compare results across cities and identify what’s important.

Nevertheless, the findings in Australia are similar. Johnson et al. (2018) We found that the higher the rent, the higher the odds of being homeless, and the lower the odds of getting out of homelessness. [6]

This is by no means a full literature review, but the pattern is clear. High rents and a tight rental market increase the chances of becoming homeless. [7]

How to deal with homelessness

Dealing with the homeless is difficult. Many social and economic factors play a role, but housing policies can help.

Homelessness occurs when people in precarious situations do not have access to stable housing because it is too expensive or simply unavailable.

Solving it means building more homes, both public and private.

To tackle the affordability issue, we need to build more housing.Photo: Getty

In the private sector, building more housing helps broadly, both by making housing more affordable and by helping reduce vacancy rates and rents.

In the public sector, more public housing means more capacity to help those most at risk of homelessness. Placement in social housing important A protective factor against homelessness. [8]

However, the government has invested little in public housing over the past two decades.

Since 1991, when the level of public housing stock peaked, public housing has declined from just under 6% of the total housing stock to less than 4% today. [9]

This happened because I chose to stop building any more. New public sector housing approvals today account for only about 2% of all new building approvals, compared to about 10% in the mid-to-late 1980s.

You can also build more. [10]

In early 2009, the federal government implemented a social housing initiative to respond to the global financial crisis and revitalize the construction sector. This has resulted in the construction of approximately 20,000 new public sector housing units. [11]

This increase is almost double what we have built in the eight years since.

Public housing is an excellent safety net for those at high risk of long-term homelessness who do not have access to private housing. But it’s an expensive solution. For most low-income earners, rent subsidies are more targeted and cost-effective. [12]

Finally, rent controls proposed to protect low-income tenants (limiting overall rents, setting rent caps, etc.) to protect low-income tenants, as rents are rising rapidly in almost every region of the country. may seem like an attractive option.

That would be wrong.

Rent controls have little impact on homelessness and, if anything, may exacerbate some of the conditions that induce homelessness. There is a real risk that the attractiveness of building new rental housing will be lost and that housing will become scarce and inaccessible. [13]

for example, Grimes and Crescentis (1997) It turns out that rent regulation has basically no effect on the homeless. Early and Olsen (1998) concluded the same.

all things considered Other distortion Even with rent regulations in place, they are poor tools for helping the homeless.

As the rental market tightens and rents rise, more people will be at risk of homelessness. This is not easy to tackle and many people and households will soon need direct assistance.

But to reduce homelessness in the long term, housing must be affordable and accessible. That means building more houses.

[1] There is some high frequency data from the Australian Institute of Health and Welfare on the number of people supported by homeless services. However, these are not as comprehensive as the Census.

[2] Homelessness is not really directly measured by the Census. But ABS derives it from other census features.

[3] This latter category refers to households that must own. four or more additional bedrooms to adequately accommodate the people who normally live there.

[4] Measured in dollars or relative to income.look Table 5Quigley and Raphael (2002).

[5] See also Quigley, Raphael, Smolensky (2000).

[6] Although the latter effect is not statistically significant.look table 1.

[7] Good literature reviews on the causes of homelessness are biased towards Australia, including the role of structural factors such as high rents. Johnson et al. (2018). Grattan Institute (2020) also provides a good summary.

[8] for example, Prentice and Scutella (2018) Using the “Journeys Home” dataset for Australia, if people at high risk of becoming homeless were placed in public housing, their chances of eventually becoming homeless were 3 times less than those who were not placed in public housing. found to be one of the

[9] Grattan Institute (2020)Fig. 3.4.

[10] Supply constraints in construction are a very real concern now, as the 2009-2012 period shows, but are unlikely to always be.

[11] Africa (2013).

[12] for example, Gratin 2020 For an overview of rent assistance and homelessness.

[13] Some (eg Tucker 1987) argue that rents are actively controlled, cause I believe that these studies are poorly conducted and underappreciated in the literature (e.g., Quigley 1989).

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