Calls to increase Sydney’s housing affordability by capping rents are misguided according to one property expert.
In the wake of revelations last week that Sydney’s weekly median asking rent has reached a record high
, Greens MP Jenny Leong said the state government should be doing more to keep rents at reasonable levels.
Leong said she plans to introduce a bill to parliament that would cap rent increases in line with the Consumer Price Index and only allow one rent increase per year.
“These latest figures show the steepest annual rise in rents in five years. Rental prices in Sydney have now gone from the ludicrous to absurd," Leong said.
“We need to be looking at how we handle the affordability of housing and provide some security to renters, and putting some caps on rent around CPI is one option for that," she told the Sydney Morning Herald.
Leong said a similar scheme has been introduced successfully in the German city of Berlin, but Rich Harvey, managing director of buyers’ agency Property Buyer, believes capping rents is asking for trouble.
“The market forces in the property industry need to be allowed to operate, any attempt to artificially control them is just misguided,” Harvey said.
“If you got a house in Sydney and you’re told you can only rent it for $600 a week when the market price $800 or $900 a week, then you’re going to drive away investors away and that’s going to mean less houses are built.”
Rather than help, Harvey believes rent caps would worsen housing affordability and there are plenty of other options available to governments.
“If you follow it through to its logical conclusion you’re just going to reduce investor demand for property and that’s going to end up hurting the people they’re trying to help,” he said.
“You’re just going to end up with less privately owned housing and that’s going to place more pressure on the government to provide public housing.
“The main way to increase affordable housing is to increase supply and there’s a whole raft of things governments can do that, things like reducing red tape for developers, changing zonings and opening up more land.”
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