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Introduction : Rising House Prices and Rent: Affordable Housing in Australia Unattainable?
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The coronavirus pandemic has had an incredible influence on the housing market, which caused an increase in house rents and house prices. The effects can depend on multiple factors and location, while many factors have contributed to this trend. Australian housing market faced a significant impact of the coronavirus pandemic period. Early in the pandemic situation, between April and August in the year 2020, housing values in Australia declined almost 2.1 per cent. The Reserve Bank cut rates to historic lows in November in the year 2020 and also said that rates would only enhance in the year 2024 at the earliest. At the start of the coronavirus pandemic, the value of the whole real estate soared from $7.2 trillion to almost $9.8 trillion today. In this essay, there is a brief discussion of how the pandemic impacted the housing market of Australia and how the prices of houses and rental costs in Australia increased due to the coronavirus pandemic period.
Discussion
Economic conditions impact the affordability of housing.
Multiple businesses and individuals experienced job losses, income decrease and decreased working hours due to financial slowdown and lockdowns during the pandemic situation of coronavirus. This particular issue made it harder for many people to afford the price of housing, specifically for those who were standing on the edge of affordability before the pandemic happened. According to a report, it can be seen estimated that almost 2.7 million people in Australia either lost their job positions or had their paid work hours fall during the coronavirus pandemic period (Collie et al. 2020). Moreover, with the financial instability, some families and individuals have had many issues while paying house rent and that caused an enhancement in possible evictions and rental arrears in Australia. Individuals and families who were depending on rentals were impacted heavily by this situation as it has put huge pressure on the housing affordability and rental market in Australia (Maritz et al. 2020). In order to prevent the financial influence of the pandemic period, the Government of Australia implemented multiple support measures and this involves income support programs such as JobSeeker and JobKeeper, which offered economic assistance to many people and households. But, despite these programs, the affordability of housing and rentals remains a big issue for many people, specifically in high housing price areas. As per Fisher et al. (2020), low-interest rates have made it more affordable and easier for some people in Australia to take home loans while others experienced mortgage stress because of the instability in income. Mortgage repayments became very challenging for many people who lost their jobs during the pandemic.
Supply-side and demand-side factors affected the housing market in Australia.
Construction operations were heavily disrupted during the pandemic period because of restrictions, lockdowns and also supply chain issues. This particular problem caused a reduction in the number of newly built houses. This is why a limited supply of available properties was been observed during the pandemic period. After focusing on the supply and demand issues during the coronavirus pandemic, it can be said that the affordability of housing and the prices of rentals increased because of the growing demand for housing and the restricted supply of available properties (MacAskill et al. 2021). On the other hand, it can be seen that during the pandemic period, the rate of remorse working increased significantly. With a high rise in flexible arrangements and remote work, many families and individuals sought housing options outside major city centres. Regional areas and suburbs have experienced a high-level increase in demand because people sought more affordable as well as spacious housing options away from crowded places and this particular thing resulted in high price rises for housing and rentals in these areas. An international decline was faced by Australia during the coronavirus pandemic because of border closures and travel restrictions for the COVID-19 situation. The decrease in the number of migrants arriving in the nation caused a huge reduction in the supply of the rental house market, which is usually occupied by overseas visitors and migrants. This specific incident was one of the key reasons for raining rental costs in Australia.
Regional areas have faced enhanced demand and rising prices.
With the increase of remote work facilities and changed lifestyles prompted by the coronavirus pandemic period, there has been an enhanced interest in living in regional areas. A huge number of people sought to escape densely crowded cities and this resulted in a surge in demand for houses and rental properties in regional areas in Australia (Raynor & Panza, 2021). Moreover, while demand is enhanced in regional places, the supply of houses and rentals could not match the level of housing demand. This instability between demand and supply for housing increased upward pressure on house rentals as well as prices. Regional places sometimes have limited and sufficient housing stock and the enhanced demand and need for housing and rentals further strained the existing supply for properties. Regional places are sometimes associated with a proper and better quality of life, access to outdoor activities and proximity to nature. The coronavirus pandemic period increased the importance of these matters and people suddenly become more conscious about their lifestyles. This particular reason enhanced the preferences and demands for living in regional areas. Many people were willing to pay higher prices and rentals for houses that provided desirable amenities and lifestyles. On the other hand, to relocate from cities to regional areas, the coronavirus pandemic period prompted many families and individuals both temporarily and permanently. This migration of people from urban places to regional areas added to the rise of demand for housing and thus the price of housing and rentals increased significantly.
The affordability issue of housing brought multiple challenges during the pandemic.
The unaffordability of housing in Australia has been an old-standing issue and the pandemic situation has increased this issue to an extent. Many people have faced hardship during the time of the COVID-19 pandemic because of reduced work hours, business closures and job losses. The high price of houses made it very challenging for families and individuals to make ends meet, specifically those who were facing issues o afford housing or rentals before the pandemic situation. Rental affordability became a heavy concern in Australia. With increasing costs of housing as well as rentals and limited income, many individuals and families have to spend a huge part of their income on housing and they have to leave little money for their daily essential expenses like healthcare, food, education and so on (Bower et al. 2021). This particular incident caused enhanced rental stress and the possible risk of eviction. Because of the unaffordability of housing, homelessness in Australia during the coronavirus pandemic increased incredibly (Parsell et al. 2022). Some people who lost their occupations and experienced economic difficulties were completely unable to afford houses or rentals and ended up without a home. This specific incident has put a strain on support resources and services for homelessness in Australia during the pandemic situation.
Affordable housing remains a complicated issue in Australia.
The country has faced a high rise in housing and rental prices, specifically in two major cities, Melbourne and Sydney. Low-interest rates, population growth, foreign investment, limited housing and rental supply and many factors have contributed to enhanced housing prices. These high prices made it very difficult for many people, specifically low-income families and individuals to afford suitable houses or rentals. The government of Australia has implemented multiple initiatives and policies to mitigate these issues like rent assistance programs, first-home buyer grants, urban planning reforms and so on. But, the effectiveness of these particular programs and their capability of achieving affordable housing for all Australians is an ongoing debate matter (Anacker, 2019). Many argue that a collaboration of factors, involving financial inequality, market forces and structural problems can make it harder to gain affordable housing for all. They focus on the need for comprehensive strategies that identify not only the supply of housing properties but also earning inequality, social support systems and access to finance. On the other hand, many people believe that increased investment, implementation of proper policies and efficient urban planning can develop housing affordability in Australia. According to many, there is a need for collaboration between the private sector, government and community organisations to address sustainable solutions to resolve this issue (Pablo, Z., & London, 2022). It is very important to identify that housing unaffordability is a rising complicated issue impacted by multiple financial, political as well as social matters. The success of affordable housing for all Australians would likely need a coordinated as well as comprehensive effort from various stakeholders over an extended period.
Conclusion
This essay briefly discussed the unaffordability of housing and rentals issues in Australia during the coronavirus pandemic. Economic instability was one of the main reasons for the affordability issue of housing and many people faced hardship during the pandemic for houses and rentals. On the other hand, it can be seen that the increase in demand and decrease in the supply of house properties made it difficult to afford suitable houses at reasonable costs. This essay properly explained every reason behind the unaffordability of housing in Australia.
References
- Anacker, K. B. (2019). Introduction: Housing affordability and affordable housing. International Journal of Housing Policy, 19(1), 1-16.https://doi.org/10.1080/19491247.2018.1560544
- Bower, M., Buckle, C., Rugel, E., Donohoe-Bales, A., McGrath, L., Gournay, K., ... & Teesson, M. (2021). ‘Trapped’,‘anxious’ and ‘traumatised’: COVID-19 intensified the impact of housing inequality on Australians’ mental health. International journal of housing policy, 1-32.https://doi.org/10.1080/19491247.2021.1940686
- Collie, A., Sheehan, L., Vreden, C. V., Grant, G., Whiteford, P., Petrie, D., & Sim, M. R. (2020). Psychological distress among people losing work during the COVID-19 pandemic in Australia. MedRxiv, 2020-05.https://doi.org/10.1101/2020.05.06.20093773
- Fisher, J. R., Tran, T. D., Hammarberg, K., Sastry, J., Nguyen, H., Rowe, H., ... & Kirkman, M. (2020). Mental health of people in Australia in the first month of COVID?19 restrictions: a national survey. Medical journal of Australia, 213(10), 458-464.https://doi.org/10.5694/mja2.50831
- MacAskill, S., Mostafa, S., Stewart, R. A., Sahin, O., & Suprun, E. (2021). Offsite construction supply chain strategies for matching affordable rental housing demand: A system dynamics approach. Sustainable Cities and Society, 73, 103093.https://doi.org/10.1016/j.scs.2021.103093
- Maritz, A., Perenyi, A., De Waal, G., & Buck, C. (2020). Entrepreneurship as the unsung hero during the current COVID-19 economic crisis: Australian perspectives. Sustainability, 12(11), 4612.https://doi.org/10.3390/su12114612
- Pablo, Z., & London, K. (2022). Sustainability through resilient collaborative housing networks: a case study of an Australian pop-up shelter. Sustainability, 14(3), 1271.https://doi.org/10.3390/su14031271
- Parsell, C., Clarke, A., & Kuskoff, E. (2022). Understanding responses to homelessness during COVID-19: an examination of Australia. Housing Studies, 38(1), 8-21.https://doi.org/10.1080/02673037.2020.1829564
- Raynor, K., & Panza, L. (2021). Tracking the impact of COVID-19 in Victoria, Australia: shocks, vulnerability and insurances among residents of share houses. Cities, 117, 103332.https://doi.org/10.1016/j.cities.2021.103332
