Economists and property experts warn against Labor’s push to beef-up renters’ rights

Economists, property groups and housing experts warn Labor’s push to beef-up renters’ rights will distort the market, discourage investment and worsen an ongoing supply crunch.

State and territory housing ministers will meet this week to develop policy options to help renters, with Anthony Albanese flagging a potential to regulate ­ the size and frequency of rent increases. Picture: iStock

Economists, property groups and housing experts are warning Labor’s push to beef-up renters’ rights will distort the housing market, discourage investment and worsen an ongoing supply crunch.

State and territory housing ministers will meet this week to develop policy options to help renters, with Anthony Albanese flagging a potential to regulate ­ the size and frequency of rent increases.

Economist Saul Eslake said ­reforms could dissuade investment into the housing market if serious restrictions were applied, such as preventing landlords from increasing rents by an amount less than inflation or obliging them to keep rents fixed for more than a year.

The former ANZ chief economist said the push was a Band-Aid solution that covered up a fundamental problem in the housing market of a mismatch ­between demand and supply.

“Depending on how serious and restrictive any proposed regulations turn out to be, there will be disincentive at the market,” Mr Eslake said.

“It may be at the margin but it may be more significant if the ­restrictions are more onerous and could have an impact on the supply of housing.”

Economic adviser for Judo Bank, Warren Hogan, warned against governments artificially capping rent increases, arguing they would “fundamentally change the investment market and jeopardise future supply of housing in this country”.

He said reducing the frequency of rent increases may help renters and the market, but warned artificial rent caps would scare off ­investment with the “very real risk” that investors would not be able to make an economic return to cover their capital investment.

“We now have to get to the heart of the problem which is ­demand and supply rather than trying to do a patchwork of policy solutions with a whole bunch of unintended consequences which undermine the medium to long term performance of the economy,” Mr Hogan said.

The Weekend Australian revealed thousands of mum-and-dad landlords were selling rental properties in response to state Labor governments’ strengthening of renter protections and ­increasing interest rates.

Fresh data from PropTrack ­reveal national house prices stabilised over April for the first time in four months.

National home prices rose 0.14 per cent in April, with the minimal price increases led by ­Adelaide (0.41 per cent), Sydney (0.40 per cent) and Perth (0.14 per cent) while prices fell in Hobart, Canberra and Melbourne.

Greens housing spokesman Max Chandler-Mather. Picture: NCA NewsWire/Martin Ollman

Centre for Independent Studies chief economist Peter Tulip said increased renter protections would worsen a shortfall in the housing market, with mum-and-dad investors more hesitant to ­invest in property amid rising ­interest rates and a changing regulatory environment.

“The rental market is incredibly tight and the signs are that it’s going to get much tighter, partly because we have very little supply and we are having a big increase in demand because of migration,” Mr Tulip said.

Greens housing spokesman Max Chandler-Mather ramped up calls on Sunday for a rent freeze and a cap on increases through national cabinet, as the party withholds its support for Labor’s $10bn Housing Affordability Future Fund.

“So if Labor actually freezes and caps rent increases at national cabinet, like the Greens have been demanding, and actually builds more public housing, it will go a long way to getting our support for their housing bill,” Mr Chandler-Mather said.

Senator Katy Gallagher. Picture: NCA NewsWire / Martin Ollman

Finance Minister Katy Gallagher accused the Greens of “screaming from the sidelines” about the rental crisis, warning ­entrenched housing issues would take successive governments to fix.

The federal government on Sunday announced a major expansion in eligibility for its first-home guarantee, its regional equivalent and the family home guarantee ahead of the May 9 budget, with friends, siblings or parents and children able to ­access government funding across the three schemes from July 1.

Independent economist Chris Richardson said the pendulum had swung too far towards investors and needed to recalibrate. He said failures in Australia’s housing policies in previous decades had hit renters the hardest.

“I understand people are concerned but we need to get the balance right better than it is at the moment. It should shift towards renters.” he said.

Opposition housing spokesman Michael Sukkar said the ­Coalition would not support a move to further distort the housing market or lower housing supply but would wait to see more detail before taking a position.

“With Labor opening the floodgates to 650,000 migrants over the next two years and no plan to house them, younger Australians renting or hoping to buy will undoubtedly pay the price,” Mr Sukkar said.

Financial and housing market analyst Pete Wargent said landlords were being discouraged from investing in housing under a changing regulatory environment which was creating uncertainty.

Real Estate Institute of Australia chief executive Hayden Groves said investors were being crunched by high stamp duty costs, increasing land taxes, and predicted further reforms to renters rights.