High Rents Put Pressure on Low-Income Earners and the Poor

A fall in house prices is a good thing for first home buyers, but it puts a squeeze on the rental market. With lower property values investors invest in other things, the bank or the share market. You would think that rents would move up and down with the price of housing, believing that monthly rents are tied to monthly mortgage repayments. This is a generality that is not always true.

The reality is that as house prices fall, rents go up as investment to built more rental properties declines. In Canberra rents increased by 2.2 per cent last year. Perth continues to experience a drain of money to mining areas from Perth city itself. Consequently, new rental properties have not been built and rents have also increased.

Those on low incomes who do not earn enough to get a mortgage are at the mercy of the rental market. As rents rise they have to pay more. Furthermore, students from poor families cannot afford to pay high rents.

Despite the mining boom in Australia, many are doing it tough. Unemployment in the non-mining sectors is starting to rise. A high Aussie dollars makes it difficult for manufacturing to compete. The big question is: Should Government support non-mining industries?" Economic rationalist would say no. The market should determine who should survive and who should go under. Nonetheless, pensioners have rents subsidized. Should this support be taken away?
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