Australian Government Rejects Greens’ Party Call for a Rent Freeze

High-rise apartments are seen in the inner city suburb of Surry Hills in Sydney, Austral on May 8, 2021. Lisa Maree Williams/Getty Images

The Australian Labor government has turned down a proposal by the Greens to suspend housing rent across the country, saying it is not actively considering the matter.

The rejection came following the Greens’ call for a nationwide two-year rent freeze and an ongoing policy to limit rent increases to two percent every 24 months.

Treasurer Jim Chalmers said surging rents were a major part of the inflation problem and that the government would focus on improving supply to tackle the housing crisis.

“That’s why we have the Housing Australia Future Fund that’s building more affordable homes, and I’m working with the super industry and the states to see if we can build more stock,” he said.

In addition, Prime Minister Anthony Albanese was unsure how the Greens’ proposal could work out.

“It’s not clear to me, short of nationalising property, how that could be achieved,” he said.

Potential Impacts of Rent Control Policies on Housing Supplies

Economists said rent control policies could have negative impacts on the supply of new housing.

Independent economist Saul Eslake said the Greens’ proposals would likely discourage investors and cause them to switch to other forms of investment if they could not make solid returns in the rental market.

A lease sign is displayed outside a home in Edmondson Park in Sydney, Australia, on April 28, 2016. Brendon Thorne/Getty Images

He also said that if the government introduced rent controls, more investors might sell their properties, which would lead to an increase in the housing supply and reduce demand in the rental market.

“But the probability is that those previously frustrated would-be home buyers who might purchase properties from landlords who choose to exit the market would be more affluent than the majority of renters,” Eslake said in comments obtained by AAP.

At the same time, Eslake said boosting rental housing supplies was the most effective way to deal with unaffordable prices and that government investment in social and affordable housing could play an important role in that approach.

Rent Freezes Unlikely To Solve Housing Shortages In Long Term

Meanwhile, Real Estate Institute of Australia president Hayden Groves said freezing rents would not alleviate housing supply shortages in the long run.

“The real estate industry, particularly property managers and owners, have implemented the rental eviction moratorium during the past two years of the COVID pandemic,” Groves said.

“At the same time, rent has increased in areas where there is a chronic shortage of supply, and unless this is addressed, the situation will worsen.”

On the Greens’ side, the party backed its proposal by citing rental freezes implemented during the COVID-19 pandemic and the use of rental controls around the world.

“Rents are out of control. Millions of Australian renters are struggling to pay the rent,” Greens housing spokesperson Max Chandler-Mather said.

“And unless the government wants to see more families sleeping in their cars, they need to do their job and act now to stop this crisis boiling over into a national tragedy.”

Chandler-Mather also said that rent control should be considered part of a comprehensive strategy that included measures such as introducing a vacancy levy, abolishing negative gearing and capital gains exemptions, and building more public and social housing.