City Futures Research Centre UNSW Built Environment

Extending Economic Cases for Housing Policies: Rents, Ownership and Assets

This research builds on earlier CFRC research published as Making Better Economic Cases for Housing (Maclennan et al, 2018) and Strengthening Economic Cases for Housing (Maclennan et al, 2019) that argued, and then demonstrated, that it is important to make more than social needs cases for housing investments and policies. In particular, housing market outcomes may impact growth and productivity as well as distributional fairness. In the second study there was focus on the productivity effects associated with the spatial consequences of housing market pressures in metropolitan areas. Significant effects on the Sydney metropolitan economy were estimated through CGE testing of plausible housing outcome scenarios.  However, the immediate consumption effects cannot be modelled by a simple CGE model because the higher rent losses of tenants are matched by income or profit gains for property landlords. Although there are a significant number of studies exploring how rising house prices impact the consumption of home owners, despite the major public policy focus on rental sector affordability, there are few estimates of the economic effects of higher rents on tenants and on the economy.

This research has the aim of reviewing what the likely effects of sustained high and increasing rents will be on an economy, and stresses potential productivity effects. The study commissioners, the Community Housing Industry Association, were particularly concerned with Australian experience but also informed by evidence from similar advanced economies, especially Canada and the UK. An important question is to identify potentially important research and policy questions as well as to indicate the data possibilities and modelling approaches that might be utilised in a longer, full study.