Evictions will rise if debts upheld

Housing markets could be hit by a wave of evictions of renters next year.

Housing markets could be hit by a wave of evictions of renters next year.

Housing markets could be hit by a wave of evictions of renters next year, as the aftertaste of the coronavirus crisis washes through property markets and moratoriums wind off amid a soft economy.

A report from Better Renting, a body for renters, casts the housing recovery in a more fragile light than market economists who have grown increasingly bullish about price rises.

The report claims that close to one million people could be exposed to COVID-related evictions if debts are not cleared before eviction moratoriums are lifted, although this could be mitigated by private and government action.

Property researchers have also pointed to softening apartment rents, particularly in inner-city areas exposed to migration and international students, which have both been hard hit by border closures.

Better Renting said up to 973,000 people may face the prospect of evictions if landlords took action over their debts. The group’s executive director Joel Dignam said that 5-15 per cent of all renters may be in rental arrears.

“Government inaction and property investors’ refusal to provide rent reductions mean many renters have been left heavily burdened as a result of the coronavirus crisis,” he said.

The group has proposed a radical solution where governments would acquire debt from landlords and write it off, to free renters from the risk of COVID-19 evictions.

If left unaddressed problems could spill over into the broader economy, with Better Renting saying some renters had drawn down credit cards or savings, or were relying on income support which would be cut next year.

“Renters had lower incomes to start with, and they tended to work in the hardest hit industries, like hospitality and arts and recreation,” Mr Dignam said. “Renters were already struggling with housing costs, and this crisis has driven people to the edge.”

The crisis has already changed the dynamics in many rental markets.

Archistar chief economist Dr Andrew Wilson said capital city rental markets had diverging results, with significantly lower and falling vacancy rates for houses offset by higher rates for units. “This reflects sharply falling demand and increased supply of units — particularly in inner-city Sydney and CBD Melbourne,” he said.

“Closed borders have resulted in a surge of previous holiday rentals into the permanent market and a significant fall in demand from international students, together with fewer prospective first home buyers who are now purchasing in near-record numbers,” he said.

Dr Wilson said that unit rents were now generally falling, with Sydney recording the sharpest decrease over the month, dropping by 2.9 per cent.

Despite pressure in the unit market forecasters are more bullish about the housing market. Macquarie Equities central forecast for national dwelling price growth to 10-12 per cent by the end of 2022, a lift from the 8-10 per cent rise it predicted in September.