Australia’s renting system is broken beyond repair


LongView and PEXA have released a White Paper entitled Private Renting in Australia – A Broken System, which claims “private renting in Australia works for no one, with poor tenure security and rising rents affecting tenants, and many landlords better off investing in alternatives like superannuation”.

The Paper argues that “Australia is one of the hardest places in the developed world to be a renter”, with insecurity being the major issue for the 2.9 million Australian households that rent.

“Long term leases are rare, and renters live with constant uncertainty about whether they will have to move”.

“Maintenance is often a headache and there are few incentives for the landlord to improve properties, for example through energy retrofitting”, according to the Paper.


The Paper shows that rental supply has shrunk this century:

Affordable rental housing

This has harmed lower-income households in particular, with two thirds of such households allocating more than 30% of their disposable income towards rent payments:

Rental costs

The bigger issue is actually finding a rental. “Vacancy rates are now at their lowest levels in 20 years, signalling that the rental crisis will likely further deteriorate before improving”:

Rental vacancy rates

While renters are suffering, the authors argue that “property investment is often complex, stressful, and risky. It can be much more time-consuming than expected, and unanticipated maintenance costs are not uncommon”.

Accordingly, most investors would be better off investing in superannuation:

Rental returns

“The impact of taxes and fees largely counteracts the benefits of leveraging and negative gearing concessions”, the Report claims.

“While some investors have done very well financially, others have had poor returns. In contrast, balanced funds held within Superannuation have historically delivered a 7.4% post-tax return over the long term, more than 1% higher than property”.

Moreover, “the diversification of superannuation across many assets and asset classes has made it much less risky than investing in one or two properties in terms of return variability”.


The White Paper concludes by claiming “many renters often have poor experiences, while many landlords receive insufficient returns on their investments, leading to decisions (such as selling the property and/or inattention to maintenance) which are detrimental to renters”.

Accordingly, “the interplay between properties, landlords, and renters, requires systemic solutions”. And “the interests of both groups must be addressed if solutions for either are to be found”.

Obviously, the rental situation will worsen as the Albanese Government lifts net overseas migration to unprecedented levels.


Where will the hundreds of thousands of migrants landing every year live when there is already a chronic shortage of rental accommodation for the existing population?

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.