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Rents set to rise even further -

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Rents set to rise even further

Broadcast: 24/07/2008

Reporter: John Stewart

In nearly every capital city rents have risen rapidly with some landlords putting them up by 25 per
cent in the past year. It's not just the high cost that's hurting, many people are finding it
difficult finding a place to rent and there's more pain to come. Some analysts predict that rents
will go up by as much as 50 percent over the next few years.


LEIGH SALES, PRESENTER: The housing affordability crisis has worsened with a new report showing
rents have soared by up to 25 per cent in the past 12 months.

The Federal Government today launched its scheme to help build 50,000 low cost apartments, but
property experts say it'll have little impact on the huge demand for affordable housing.

And, there's a warning tonight: rents may be about to go much higher.

John Stewart reports.

JOHN STEWART, REPORTER: According to a new report, high mortgage rates and an under supply of
housing are key elements of a heady mix, pushing rental prices to record highs.

MICHAEL MCNAMARA, AUSTRALIAN PROPERTY MONITORS: There is not doubt that the rental market is
deteriorating and it's deteriorating rapidly. And sadly, with such high mortgage costs, and with
such a weak construction sector, there seems to be little relief in sight in the short term.

JOHN STEWART: The Australian Property Monitors survey shows rental prices have soared in most
capital cities during the past 12 months. Unit rents streaked ahead in Perth, rising 25 per cent.
In Sydney, rental houses rose by 15 per cent, up 17 per cent in Melbourne and 15 per cent in
Darwin. Brisbane was the only capital where there was some respite. Unit rentals still rose there,
but at three per cent, it was less than inflation.

Hobart and Adelaide remain the most affordable capital cities for renters.

The spike is being put down to high interest rates, discouraging potential home buyers from taking
the plunge. So there are more renters, and at the same time, fewer properties are being built. And
those who do own rental properties are also under pressure.

MICHAEL MCNAMARA: Investors are clearly feeling the pinch from higher mortgage costs and they're
passing those costs onto their tenants.

JOHN STEWART: Another report from AMP NATSEM shows that between 2001 and 2006 average gross
household income rose 31 per cent, yet housing costs rose twice as fast.

MARTIN NORTH, FUJITSU CONSULTING: The 450,000 who have now moved into a level of stress where they
probably can't continue to make their repayments on time, unless they refinance or unless they
decide to sell up or do something dramatic or get foreclosed.

JOHN STEWART: And high migration levels, partly to tackle the skills shortage, are also adding to
pressure on rental properties.

BERNARD SALT, DEMOGRAPHER: There is no doubt that Australia is growing at record rates at the
moment. More than 300,000 people per year are being added to the Australian continent. And the
immigration component of that - around about 180,000 people per year is also at record levels. You
cannot add that number of people to Australia year after year and that not have capacity problems
in infrastructure and in housing.

JOHN STEWART: The Federal Government today announced a new scheme subsidising 50,000 new rental
apartments being built by the private sector.

TANYA PLIBERSEK, HOUSING MINISTER: This scheme delivers $623 million between now and 2012 to
support the building of 50,000 new affordable rental properties that will help low and moderate
income working Australians.

WAYNE SWAN, TREASURER: What it needs is long-term commitment. What is needs is long-term vision.
What it needs is partnership.

JOHN STEWART: But, with the big migration intake expected to continue, demographer Bernard Salt
doubts that the Federal Government can make a significant impact on the housing shortage.

BERNARD SALT: Birth rate has increased steadily for seven years now, so we're growing on two
fronts. The birth rate is up, the immigration rate is up and the death rate really hasn't changed.
As a consequence, there are record numbers of people being added to Australia every 12 months.

JOHN STEWART: For renters, the long-term outlook is bleak. Australian property monitors are
predicting rents in capital cities could rise by 50 per cent in the next five years.

John Stewart, Lateline.