Stimulus wind-down to fuel housing affordability stress

A complete phasing out of the federal government’s JobKeeper measure in March 2021 could tip 124,000 households into housing affordability stress (HAS), according to research.

The Australian Housing and Urban Research Institute’s (AHURI) Supporting Australia’s housing system: modelling pandemic policy responses report said that 73 per cent of these households predicted to experience HAS would be private renters.

The research was conducted by the University of Adelaide and Curtin University for AHURI to examine the likely impacts on individuals, and their households, of lost employment and income due to COVID-19, and the consequences for their ability to meet their own housing costs.

Lead author Professor Chris Leishman said the analysis showed that without the JobKeeper, JobSeeker and the coronavirus supplement interventions, the implications of large-scale job losses on households’ ability to meet housing costs would have been “devastating”.

Professor Leishman said that while around 103,500 households entered situations of HAS due to the COVID-19 crisis, this figure would have nearly doubled from 757,000 at the baseline to more than 1.36 million, even after Commonwealth Rent Assistance (CRA) had been taken into account.

“The policy concern is that if these highly successful government interventions are withdrawn prematurely, almost a third of those saved from suffering housing affordability stress will now experience it,” he said.

“Without an extension of the JobKeeper income support measures beyond March 2021, the number of households living in HAS is likely to increase significantly, to at least 793,000, and could reach as high as 893,000.”

The researchers found that a hypothetical phase four of JobKeeper that extended support through a reduced payment of $650 per fortnight would be “more than sufficient” to reduce the number of households in HAS below the baseline.

They believe that when combined with CRA and a national 25 per cent rent relief scheme, the extension could halve the number of HAS cases.

The researchers’ economic modelling on the impacts of the COVID-19 crisis showed that once government support measures cease, total unemployment in 2021 could peak at 1.752 million under the most severe of three scenarios modelled.

The mildest scenario modelled by researchers showed that, totally, unemployment would exceed 1 million people, on par with the highest unemployment rate recorded in 2020 to date.

[Related: Over half of all Aussies at risk of vulnerability: survey]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.