Economists and advocates have urged the Queensland government to be “brave” and introduce a cap on rent increases, amid panicked claims that such limits would spark “a bloodbath” for investors.
The Queensland premier, Annastacia Palaszczuk, told reporters on Monday the government was “very seriously” considering introducing a rent cap ahead of a housing roundtable next week.
This drew fierce and fast backlash from the state’s opposition, the real estate sector and tabloid media.
Good morning Queensland 🌞 Here's what's making headlines today 🗞️ Read the paper exactly as it was printed: https://t.co/5p41h2caxk pic.twitter.com/p7eGeskaZM
— The Courier-Mail (@couriermail) March 20, 2023
On Tuesday the Real Estate Institute of Queensland (REIQ) demanded the government “immediately withdraw” its comments.
Appearing at a press conference with shadow treasurer, David Janetzki, REIQ’s chief executive, Antonia Mercorella, said rent controls would shatter investors’ confidence in Queensland’s property market.
“The thought bubble announcement yesterday around contemplating rent controls shows a government with seemingly no grasp on basic economics,” Mercorella said in a press release.
Media reports have included warnings of a “bloodbath”, with “investors tipped to flee the state” if rent controls were introduced.
But the chief executive of the Queensland Council of Social Service, Aimee McVeigh, said the government needed to act, with the state facing the worst rent inflation in the nation.
“It’s vital that a limit on rental increases is considered, given the extraordinary pressure Queenslanders are currently under. More and more Queenslanders are being forced out of their homes, as a result of skyrocketing rents,” McVeigh said.
Tenants Queensland’s chief executive, Penny Carr, urged the government to hold its nerve and limit rent increases to 10% above CPI.
“It is the government’s job to regulate the market and what we’re seeing at the moment is behaviour that is price-gouging,” Carr said.
Carr said Queenslanders need “courageous leadership from the government”.
“[Rent controls are] in place in the Australian Capital Territory … and the industry is still operating. It hasn’t crashed and burned,” she said.
The deputy premier, Steven Miles, said rents will not be frozen, as investors “will need to see an increased return” due to inflation and rising interest rates.
“But whether there should be limits placed on that increase, or whether there should be limits on how often and how they can be increased, they are all the sorts of things we want to discuss,” Miles told reporters on Tuesday.
Economics professor at Griffith University, Prof Fabrizio Carmignani, said short-term rent controls could help alleviate housing stress.
“The fundamental roots of this problem require long-term actions but we also need to look at something that is effective in the short term,” Carmignani said.
“We shouldn’t think of this as the only thing to be done. In the long-term, investment in social housing, for me, becomes critical.”
Carmignani said the government should consider capping rent increases to a few percentage points above CPI and set clear limits on the duration of such a cap.
“We need to … focus on the economics of it and the evidence we can gather from similar policies that have been implemented in other places,” he said.
Economist Cameron Murray said rent controls are “useful” in addressing costs of living but they should have been introduced 12 months ago.
“At the end of the day, what’s proposed is a relatively minor cap,” he said. “It would have had no actual effect for the last decade had this rule been in place.
“All it would’ve done in the last 12 months is smooth out the rental increase that was seen by many, many tenants over multiple years instead of all at once.”
Murray said the real estate sector and some economists had been perpetuating myths about rent controls.
“If it was true that these controls somehow increased rents in the long run then it would make sense for landlords and property developers to lobby for them,” Murray said.
But Brendan Coates, the economic policy program director at Grattan Institute, said limiting rent increases would increase demand.
“It makes it harder for people that need to find a home, whether that be international students or women fleeing domestic violence,” he said.
Coates said the federal government should instead increase rental assistance by at least 40%. “That will put money into the pockets of low-income earners to help the keep a roof over their heads,” he said.
