Once upon a time renting was something you did in your early 20s before you married and bought a house in the suburbs.
But these days, things are a little different.
“More and more young people are renting due mainly to housing affordability issues,” says Director of Australian Housing and Urban Research Institute (AHURI) at Swinburne Research Centre, Dr Wendy Stone.
“It used to be a transition phase where you rented until you could afford a house, but we are seeing people in rental accommodation for very long periods.
“And without some sort of government intervention the proportion of young people who cannot afford to buy their own home will only increase.”
Research by AHURI reveals that around two million Australians now rent their homes, a figure that has almost doubled in the past 30 years.
“About one quarter of Australians now rent privately so it’s a significant number,” Dr Stone says.
And yet despite the increase in renters we remain a nation hell-bent on home ownership, and still tend to regard the rental market as a second-tier option.
But given the exorbitant costs of home ownership in our capital city markets is it time we embraced renting?
Advantages to renting
While there are more people renting than ever, not all of them have been forced into the rental market.
“There is now a significant number of people who rent out investment units that they buy and then rent elsewhere by choice,” Dr Stone says.
Property lecturer Peter Koulizos adds that many young people prefer to buy an investment property in an up-and-coming area with good capital growth prospects, while renting a house in a suburb they could never afford.
“It allows them to still buy something but they get to live where they actually want to live,” he says.
With more marriages splitting up these days, home ownership can be a devastating financial loss, too.
“People were once able to recover from divorce but in today’s property market it is a lot harder,” Dr Stone says.
“With renting, you also have much more freedom to relocate cities for a new job, which is much harder when you have a large mortgage to pay off.”
Stop the whinge
Members of generation Y often complain about being priced out of the property market, and while Mr Koulizos agrees it is expensive, it is not impossible.
“I don’t want to sound like a grumpy old man, but young people often complain they can’t afford a house but they have just spent their entire 20s travelling,” he says.
“My middle daughter has been overseas more times than me and if she were to add up all the money she has spent on travel she would have enough for a deposit.
“If you want to spend your 20s travelling that is fine, that is where your priorities lie. But you can’t then whinge that you don’t have a deposit.”
For those who are desperately saving for a deposit but still finding it tough, Mr Koulizos has some sympathy. Unfortunately, he thinks it will only get tougher for young buyers.
“We will become like European cities where unless you inherit a property you have no hope of home ownership,” he says.
Although, as Mr Koulizos points out, home ownership is less of a dream in Europe, as tenants have greater protections — including longer leases and rent caps — which make renting a much more attractive option.
“I have no problem with people renting by choice, what I think is extremely sad is that we could become a nation of people renting because they have no choice,” Mr Koulizos says.
Dr Stone wouldn’t mind seeing some rent controls in Australia, and thinks we could do worse than looking to Europe’s example on protection for renters.
“In some cases in Europe, tenants have full rights to the property, they can have a pet, have a garden and stay there for 20 years,” Dr Stone points out.
“In Australia that is a lot harder when people are selling their homes for profits and people are being moved on.
“Until renters are given the ability to be homemakers — which comes through secure tenancy for a long period of time — then that transition from a nation of home owners to renters will be a hard one.”