Research from the e61 Institute revealed that building market-rate housing helps reduce rents on existing homes, Property Council reported.
The study analysed 9.4 million rental transactions from 2007 to 2022, finding that rents drop by 3.6% for every decade a home ages.
“As properties age, they depreciate due to wear-and-tear,” said Nick Garvin (pictured above), research manager at e61.
Regions like Parramatta in Sydney, which saw significant new home construction, experienced rental price drops of nearly 11% during the 2010s.
In contrast, areas lagging in home building, such as Sydney’s northern beaches, saw rents increase by almost 3%.
“Building new market-rate rentals does benefit the majority of renters over time,” Garvin said, reinforcing the positive impact of increasing housing supply.
The research found that 90% of rentals became more affordable as they aged, but the cheapest 10% actually became more expensive, likely due to renovations or underpricing.
“Market-rate supply eases the burden of targeted policies, but can’t fully replace social housing or rent assistance,” Garvin said.
Australia needs to build 60,000 homes per quarter to meet the national housing target of 1.2 million new homes by 2029. However, housing completions fell 9.5% in the March quarter, signaling a challenge ahead in addressing housing shortages, the Property Council said.
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