The dream of owning your own home on a 'quarter-acre block' seems to be fading, with a marked shift in the quintessential Australian goal, at least for families in Victoria.
A reported 42 per cent of rentals in Victoria are now occupied by families, with the rate rising year after year.
The general perception is that renters are a transient population – at university, living the single life, or on a work or study visa. However, data shows almost half the rental population – around half-a-million – are families, with strong ties to their community through work, school and family.
Cost is largely the driving force. As property prices continue to grow exponentially month after month, rental prices are fairly stable, increasing at a rate of around 2.6 per cent per annum.
There is a downside to renting. For starters, it isn’t your property – you’re at the mercy of the owner, and their possible love of peach-coloured carpet! A more serious drawback is the relatively short lease periods. A 12-month lease agreement is the norm, making renting a less secure avenue, but one that many Australian families have to risk.
On the other side of the globe, renting rates are high, with fewer people hoping to ‘one day’ own a property – and why would they? In Europe, for example, tenants are safeguarded by longer lease agreements and a more difficult eviction process, with the owner having to jump through hoops to issue a vacate notice. This is in stark contrast to the relative ease here in Victoria, where landlords have the ability to give notice to a tenant for no specified reason.
Tenants in Australia lack protections offered in other countries, most notably a cap on rental increases. In Victoria, there is a cap on the number of increases that can be served each year, however, there isn’t a capped amount on the rate of increase. One upswing in the market could mean an entire area is no longer affordable for some renters.
In Europe, renting is perfectly respectable, even expected, and in Victoria you can feel a shift to a similar sentiment. Families are renting as much out of necessity as they are in million-dollar suburbs to secure school entry into elite and zoned state primary and secondary schools. Renting close to the CBD for the price of buying in the outer suburbs – with the perks of quick commuter time and extra disposable income to splash – seems a no-brainer.
There is, of course, a risk that rent will go up, which it invariably will in the inner suburbs as property prices continue to rise steadily. This will leave some long-term renters priced out, if and when they’re ready to buy, forcing them to move further than they would have had they’d bought into the property market when they had the chance.