Rental Markets: A Frantic Fight for Shelter as a Service?

Gareth King (00:28)

Thomas, thank you so much for joining us and welcome to the show.

Thomas Sigler (00:32)

Thanks for having me, Gareth.

Gareth King (00:34)

Before we get into it though, can you just tell us a little bit about yourself and what you do?

Thomas Sigler (00:38)

I'm an associate professor of geography at the University of Queensland in Brisbane. My primary research and teaching foci are on urban and economic geography. So essentially the structure of cities, the economy of cities, the culture of cities, and how that relates to space. So, it does relate to urban planning. And in fact, most of my students are studying to be urban planners, but I personally call myself a geographer.

Gareth King (01:04)

You know, it gives you, I guess, a pretty good understanding of what we are about to talk to, which is the various ways that the internet and technology has changed, kind of a hot button issue over recent years, which is the property rental market. Before we get into those different ways, what would you say has surprised you the most about how things are playing out so far?

Thomas Sigler (01:22)

I guess my knowledge on this topic is relating to a lot of work I've done on short-term rentals, so specifically on Airbnb. I do research on the platforms, but more on the use of the platforms to facilitate property rentals, primarily in Australia, but in other countries.

I guess if I had to say the most surprising thing, would sort of be the longevity of it all. So how the arc it's taken and actually how stable things are over time. Remarkably, I've been tracking the short-term rental market for over a decade in Australia. And just the fact that the trends actually don't change too much. They do fluctuate, but the fact that once the trends were established and the patterns of short-term metal use of digital platforms was established, we've kind of observed the same thing repeating itself for the better part of a decade.

The fact that people are pretty happy overall with the existence of these platforms, and that a lot of the externalities or lot of the issues they've caused have sort of been debated and are gradually being remedied through policy.

Gareth King (02:24)

Why I wanted to speak to you about this one was because for a lot of people, these short-term platforms like Airbnb are really often blamed as a main driver of what can be considered a rental crisis simply because, you know, if it's a zero sum game to somebody, one short-term rental is one less long-term rental out of the market.

But beyond taking what could be a long-term rental property out of the market and turning into a holiday or short-term rental, how do these platforms like Airbnb impact the rental market?

Thomas Sigler (02:57)

Well, it's a complicated answer. I guess the first thing I'll say is that it's very locally specific. So, in a major city like Melbourne or Sydney or Brisbane, the absolute number of short-term rentals surprisingly is very low. And the reason for that is rents are high. So, when a landlord makes a decision to rent it on a short-term rental platform versus a long-term rental platform, given that the challenges associated with registering it, with changing the sheets, replacing the soap, oftentimes, the additional profits, so what we might call the rent gap of renting them short term may not justify the underlying price.

In regions, it's a bit different, and I think it's very geographically specific. So, I've been called into a number of policy debates in places like Byron Bay and the Sunshine Coast, where there are a very large number of short-term rentals relative to the long-term rental market. And the issues these places face are entirely different. So I guess establishing the first thing as very geographically specific.

The other one is regulations, and this is where the platform element comes in. The long-term housing market and the mechanisms by which long-term rental contracts were produced and agreed to and deployed and broken were very 20th century.

And so, and realize we'll debate this at length throughout the episode, but what short-term rentals have done through their platforms, aside from purely transforming the housing market through the property themselves, is they've provided digital mechanisms to solve, or cripple, a lot of problems that were festering from a completely outdated system. So, the pen and paper system across most industries is a dying breed. But rental contracts were still very much pen and paper until five or 10 years ago. And there's still, you know, Docusign PDFs.

And so, I think what I've always said about short-term metals is that they may not be around forever, but ultimately long-term rentals will look more like short-term rentals and short-term rentals will look more like long-term rentals. And by that, I mean the rules of short-term rentals be much more established and systematised, and the processes and mechanisms by which we sign a lease agreement will be much more digital, arguably more transparent and much more facilitated through digital platforms than previously was the case.

Gareth King (05:19)

There's an interesting point that you've raised there too around solving some of the problems with the antiquated system. Personally, I am quite a big fan of Airbnb. Like I find that it has what I need at certain times without the drama of hotels and longer-term things. And I do find, as you've alluded to, that ease of sorting everything out and efficiency online.

One of the things I'd love to dig a bit deeper into here is you mentioned that the numbers are fairly small as an absolute as well. If so many people are blaming Airbnb and the like for being a main driver of what is known these days as the rental crisis in Australia, how accurate is that as a statement? And what is that absolute number over time?

Thomas Sigler (06:04)

Yeah, so to give you an idea, the proportion of properties in Australia's major cities that are short-term rentals is approximately 1%. So, 1 out of 100 dwellings are short-term rentals. Now in certain districts, for example, in central Sydney or central Melbourne or inner-city precincts of Brisbane, it's higher, could be 2 or 3%, maybe 5%.

On the Gold Coast, or Sunshine Coast in certain council areas, could be as high as 10%. And really, really tourism-oriented places like the central coast of New South Wales or the Mornington Peninsula of Victoria, it could be as high as 20 or 30%. And that's entirely logical because those places are built as tourism destinations. But when I say it's a very low percentage, we're talking 2% nationwide.

So, Australia has approximately roughly 11 million dwellings. And on a good day, and by a good day, I mean that's when a lot of people have made their properties available on Airbnb and similar platforms. You're looking at about 250 to 300,000 dwellings. On an average day, you're probably looking more at 180 to 200,000. So, you're looking at about a little under 2% of the housing stock is short-term rental dwellings.

Now, if you break that down further, a lot of those short-term rentals are actually holiday units that were built from day one to be holiday units. Off the top of my head, would say that's about a third of Airbnb's. Another third are what I would call sort of temporary short-term rentals. So, either people traveling and making their units available or renting out another room or people that are sort of dabbling. And that's probably another third of the market. So, of that 200,000, how many of them are permanent long-term short-term rentals? I would estimate 50 to 80,000, which is less than 1% of the national housing stock.

Now if you're a renter who's struggling to find accommodation, that's still a problematic number. But as I've said many times on the national news media, overwhelmingly, it's not a large proportion. And I do personally think the short-term rental question is a bit of a red herring from housing supply, which is the larger question.

Gareth King (08:20)

Some very, very good information in there. One of which I would have been asking you next was around what amount within that absolute number that we touched on were previous holiday rentals that had just been converted to these platforms for convenience, et cetera. But that's great that you've outlined it there.

Let's continue on some of the other effects that the internet and technology has had on the rental market as a whole. Now we know it's obviously made it so much easier to check out a home in a new place, obviously virtually. But I think what, what that makes me think of is it gives people a lot more option to kind of establish themselves somewhere before making a leap. You know, once upon a time, as you said, in that paper and pen system, you probably would have had to travel somewhere, try and sort it out once you were there, maybe stay in those holiday rentals, a hotel even. But now it seems like there's a lot more fluidity in people moving around and that transparency. And I guess, I want to say credibility that's driven through secure forms and things like that.

So, all of that convenience and ease and fluidity and, and I guess transparency and visibility said, the other side of that coin to me is potentially the demand that it might create. Like if you've got an amazing property in, as you said before, Byron Bay that you could be wanting to rent it out short term, long term, whatever. But the fact that people from not only all around the country, but all around the world potentially interested in Byron Bay cannot clog up the system, but take part in the system through the technology driven, you know, application process, et cetera.

How does that affect locals and those close by as well when let's say out of towners could just swamp everything, take it over and price locals out?

Thomas Sigler (10:03)

Yeah, so I've got sort of unconventional perspectives on this. I mean, we live in a global world, right? We have no problem going on holiday in Bali or going on holiday in the south of France and taking our Australian dollars or our American dollars and sitting down at a nice lunch or taking the boat out. You know, something that the locals in Sicily or Bali couldn't dream of doing. But then when it impacts our communities, we suddenly get very resistant to outsiders.

So I think it cuts both ways. I mean, there's some quite serious issues around provision of resources. So, for example, what I mean by that is waste removal, schooling, postal services. So, for example, if you're an Airbnb guest and you need to receive a parcel or an urgent package, do you have the right to use that mailbox? Are you actually a resident? And how long do you have to be a resident before you can not only use the mailbox, but have a right to use the mailbox as someone who's paying money to stay there?

Do you have the right to create additional rubbish? So, if you are, you know, hosting dinner parties and doubling the capacity of the local skip bin, should you pay extra for that in council fees? I mean, all of these things are unresolved. And if you're staying somewhere in an Airbnb, I mean, I've heard anecdotally of athletes or performers, for example, performers in Cirque du Soleil or musicals who are quite itinerant, who take their children with them. So as a resident of an Airbnb, if you're a circus performer, do your kids get to enrol in the local catchment? Should you have to homeschool them? I mean, these are really unresolved.

Now, I've strayed a bit from your question, which is about community resistance. I will admit that there is community resistance, but at the same time, there tends to be a correlation between places that have a high proportion of transient populations and places that heavily rely on tourism economies.

In more remote parts of Australia, as you know, jobs are scarce, right? Oftentimes, places are reliant on a particular resource, or a particular tourism economy, or a large number of jobs, both direct and indirect. So you know, directly the cooks and the cleaners and the service providers for tours of various kinds. But indirectly, the local council collects revenues from landowners and that goes to furnishing resources for the permanent community. So that's an issue.

I mean, it really cuts into, you know, the sort of nimby-yimby debate to some degree. And you do find that there's a bit of resistance on a neighbourhood scale saying, look these are outsiders, these people don't belong. And that's what a lot of the resistance in places like Barcelona has come as a result of.

Gareth King (12:37)

Yeah, of course, that's a great example, Barcelona too, but, you know, we know that as a city so driven by tourism dollars, just absolutely choking by those same tourists. And I think as you've touched on there, it just comes back to resources of all types, just not scaling up with that demand.

But that, that makes me think back to something you said there, which was, and tell me if I've taken it the wrong way. So, around regional towns that probably swell in population up to that limit of the resources within that local area, or whether there's jobs within a certain commute from this town, you know, it seems like these little systems develop fairly organically to sustain themselves.

And one of the other impacts of technology that, from my perspective, are affecting these things is we know that over the last five years or so, especially, there's been this gigantic push and shift towards remote work. Now people may not see working remotely as something that they do beyond their own house, or maybe they go away for a weekend and can work from there. But one of the big things, as you alluded to there, we did see was a huge amount of people escape to the regions.

But obviously it's not just a national issue. It is a global issue, as you said. And so, the same people potentially advocating so much remote work, taking up a property that's been converted to short-term for people like them, et cetera, et cetera. It feels like this really connected system that the effect is rolled over from one place to the next, wherever it goes, as long as that technology lets people work from out of town.

How much is this considered when we do debate rental property markets and any kind of shortage? Does remote work come into it at all and the need for those people, or do they take what were always holiday lets or even hotel rooms? How does that play out across the world?

Thomas Sigler (14:33)

We're still gathering data. This is a really important and interesting topic. So, to be perfectly honest, we have very good data about the properties. We have decent data on the owners. We have almost no data on the users. And the reason for that is very simple. When you sign up for Airbnb or booking.com, they own your data and they're not going to give it to a researcher. So, their own internal research teams do know the answers to these questions, and they do deploy their own surveys to measure these things.

But I have a strong hunch, and this is from a combination of circumstantial data and also just reports I've read, that short-term rentals really are pivoting away from the concept of tourism, in many cases, particularly in bigger cities. Digital nomadism is one phenomenon. In fact, literally before this meeting, I was meeting with a new PhD student who's studying exactly this topic, how digital nomads consume housing through short-term rentals.

And just going back to the digital nomads, not all digital nomads are created equal. Some are nomads for the lifestyle reasons, but some are nomads because they're exiled from their home country. Some are nomads for tax reasons. There's a lot of reasons you might work outside of your home jurisdiction, and in that case, temporary accommodation is just a means to an end. It doesn't necessarily draw you in. It's just something you need along the way to do your job.

So, I wish I had that data, but i've certainly heard reports, in fact, have recently been contacted by some folks from the Short-Term Rental Association of Australia. They were concerned about some new legislation in Brisbane. And the statistics they shared with me, without getting too specific, were of the tenor that the majority of their tenants were not tourists. The majority of their tenants were people who were displaced from their own homes by insurance, people who were visiting family members long-term, people who were staying near hospitals either because of treatment themselves or treatment for family members, people who had recently relocated to a city or sold their home and they were waiting for their new home to be finished or new home to be purchased.

So, there's a lot of interstitial reasons someone might need accommodation that don't necessarily relate to tourism. Tourism markets are pretty well-served by hotels. So again, I don't want to be like a denialist who's saying it's not used for tourism and certainly not, and it certainly are invasive in the case of many cities like Barcelona. But I also think we just need better evidence.

Gareth King (16:55)

Yeah, that's a great point. And I think something that is not mentioned enough in this debate, you know, it's very easy to just blame a property owner that's putting it on Airbnb as just some evil person. But as you've mentioned just now, there's many reasons why someone will need one of those properties. It's not just people coming into a place and displacing locals or someone just trying to make as much money as they can out of a housing shortage.

Okay, we've spoken around short-term rentals and how that's kind of playing out, but we know that there's also a lot of other impacts that you touched on at the start there that technology has had on the entire searching and signing and living in a rental property situation. What do you think has been the biggest technological benefits so far when it comes to either sourcing or leasing out a rental property?

Thomas Sigler (17:51)

I think one of the limitations of the conventional rental market, the pen and paper economy, as we called it, was limited access to information. And that could be accidental or that could be deliberate. A deliberate example would be African-Americans in the United States historically have had limited access to property markets because certain real estate agents just simply wouldn't engage with them. They were excluded from certain markets because of the way they looked or the perception that they would add negatively to property values.

But with digital platforms, they can research every property, and all people have access to the same information, which not only evens out those information asymmetries, but it also helps you make the case that you are being discriminated against if you are rejected for some reason for a rental application.

So that's not to sugarcoat it. The same technologies can also be deployed the other way to exclude certain populations, particularly non-digital populations. There aren’t too many non-digital populations in Australia, but certainly the elderly, those over 70 or 75 years old are less digitally savvy than those, say, under 40. So, there may be some asymmetries in terms of who has the best access to that information.

And I think the other risk, of course, is that the regulation becomes a bit more opaque. So, regulating a platform is a bit black box. You don't know what's in the platform. You don't know what it depends on for information. There could be a lot of personal information about you that isn't necessarily required to be disclosed. But I mean, for all you know, they could be scraping your search history. They could know things about you based on the device you're using, the IP address you're using. They could infer things about you based on a credit history.

Whereas in a pen and paper economy, at least in theory, you could put your best foot forward. And in theory, assuming there was no discrimination, you'd have a fair shot. I don't think either one is more or less discriminatory, but I do think digital platforms come with new challenges for regulators because a lot of those IP concerns are litigated in jurisdictions outside of Australia. They're American courts or even places like Ireland, which are tax havens, are domiciling these corporations and therefore you're not able to access the information they hold about you.

Gareth King (20:07)

Yeah, lots of workarounds if you're trying to find them, and you raised something good in there that was around just the amount of information that you've got to potentially hand over as part of your search and application.

Now I know in the past when I've applied for various rentals, it seemed like every time I was doing it, the amount of information that I had to upload every single time, to every different estate agent and property manager, was just growing like crazy. And one thing that came up a lot when I had questioned that and spoken to other people about it ,was the fact that very, very secure and responsible companies based digitally have got data breaches and leaks all the time.

And without saying either way, like, let's just say a lot of people who do rent properties don't really have great feelings towards their, you know, their estate agent or their property manager or whoever they're handing over all this data to. The fact that you have to upload all of this information basically every time for every application, it just feels like you're exponentially increasing the risk of it being leaked, some of your most sensitive information, which is obviously a huge downside around these tenancy application technologies.

One thing I read about just recently, which I was, I wasn't shocked, I was just shocked to see it mentioned, was that property managers would monitor tenants’ social media accounts for updates around a promotion at work to be like, okay, they've got more money now. I'm going to pass that onto the owner or the landlord who now we can raise the rent, and you know, they monitor your social media or everything. Just it's like, it feels so invasive, but it's not obviously a unique thing that they're doing. It's out there, but they're just using it to benefit themselves in their job.

All of that said, that's a few negative aspects of this kind of digital tenancy application management, et cetera. They get a lot of hate for various reasons, but they do bring some benefits. Now, one of those is obviously speed and ease of sorting all of this stuff out. How else are they helping people that are in the market looking for a rental? Not just a short term, but just a longer term one?

Thomas Sigler (22:26)

So, as I said, I think the biggest advantage of digital economies is the transparency and the availability of information on both sides. So, from the perspective of a tenant or a potential buyer, you know virtually every property that's on the market. And you can make very well-informed decisions about what's an appropriate price, what's an appropriate set of terms.

The internet does provide endless information, AI reduces it for you very quickly, whether AI is accurate or not is another question, but the average person can gain access to enormous volumes of information about what's available, what their rights are, and so on.

But as you said, the counterpoint to that, of course, is that the landlords and the landlord economy, which includes the platforms themselves, so your realestate.com, your Zillow, your Domain, but then also the intermediaries, so the brokers and the agents also know a lot about you, and they can make decisions accordingly to either exclude you or price you out, or to select you for a property or not based on things that were previously off the table.

So yeah, look, it goes both ways. I think the sheer volume of information is a really interesting one, particularly because that information is not very well regulated. It's to some degree, it's self-regulated. You know, realestate.com in theory, won't allow you to upload photos that aren't true to life. Although a lot of the photos are generated by AI these days, but it has to at least resemble the property you're selling.

But at the same time, you only know what you know, and you don't know what they know about you. So again, as you mentioned, you often have to log in with Facebook or Google or in order to even access the site in the first place. But once you do that, who knows what they're drawing. These companies could actually pull quite a bit of data from Google, and Google knows quite a bit about each of us.

Gareth King (24:12)

Hmm. It definitely does. You mentioned there again, regulations. How are things, if you can give us a bit of an understanding, how are things regulated at the moment? What regulations are in play, and where do you see the regulation of what seems to be quite a loose situation still, where do you see that heading as we move forward?

Thomas Sigler (24:31)

Well, as I said, think long-term rentals will look more like short-term rentals and short-term rentals more like long-term rentals. And what I mean by that is that in some distant future or not so distant future, I think the rental application process will be a matter of holding your phone up to your face, scanning your face, adding your thumbprint and saying, find me five properties under $800 in a five kilometre radius of campus.

And it'll do that. It'll say, do you want me to apply to these properties for you? And you'll know the, it'll be like a Tinder swipe right, swipe left situation, where you'll say these properties are suitable, these properties are unsuitable, and you'll have a match within a couple of minutes.

Is that a good thing? It's certainly faster. It's certainly less paperwork. Does it mean more people get excluded or unable to participate? I mean, the key question is equity. There's no question about the fact that it's more efficient. It's certainly more efficient. Is it more equitable? Probably not. And so, I think regulation really needs to look deeply in terms of what exposes those inequities and what creates those inequities.

Is it digital access? Probably not the biggest issue in Australia. Most people have the internet. Is it literacy? Does everyone who's applying for an apartment speak English? You know, I'm supervising a PhD on Chinese brokers. And one of the roles the Chinese brokers historically played was facilitating property transactions for migrants from China whose English wasn't great.

And what we found, interestingly, through these interviews that my PhD student has done, is that over time, the Chinese community in actually speaks much better English than they used to, on average, and that the role of the brokers has also changed. These ethnic Chinese brokers have become influencers on various social media channels, attracting listings in order to further their business, and their brokerage role has also shifted.

Gareth King (26:17)

That's, that's a really interesting point too, that you've just mentioned there, language familiarity. Now what I've seen just looking into this stuff myself, someone might take a photograph of a, let's say a property signage written in Chinese, and share this photo as they're making these houses just for Chinese investors overseas, which if you, if you take that at its worst possible interpretation, it sounds really bad.

Yeah. You've just, guess, highlighted there one of the misunderstandings of, you know, what's delivered by technology, which is the way the information that may not be correct can spread about the housing crisis. Also, who's at each side of it there, whether it's those brokers or I guess the buyers, or the renters, whatever.

But you also touched on something interesting there around the notion of property influencers. Now this is something that is huge. Almost every estate agent is doing it now. You know, you've got these walkthroughs delivered via personality, et cetera. You are not just limited to what you can find in a real estate agent's window or in the local paper or even just those photos that you mentioned on realestate.com that are very obviously done with AI, but they've got some notes on there that are at least calling that out now.

On the topic of, I guess, property influences, what role are they playing beyond converting local information to potentially an international audience? Like what role are they playing in the current ecosystem, I guess?

Thomas Sigler (27:50)

Yeah. So, I think you've touched on a very important topic and it's, it's actually a bigger ecosystem than just the estate agents. I always call it the property gravy train. It's a train that has a lot of momentum and is very hard to slow down. And that train is facilitated in large part by very generous tax gifts to owners and especially to investors, and to taxation systems that really facilitate property investment.

And there's multiple components to that. So, there's the underlying taxation regimes and regulatory regimes that are sort of superficially driving it. But then there's also the media machine, and the media machine could be everything from an article in the newspaper with, you know, a 25-year-old has just bought his 10th property, to these finfluencers who are spruiking get rich fast schemes, or convert your properties into short terminals and become a millionaire. And there's plenty of them.

And I guess the short answer is it doesn't matter whether what they have to say is correct. It's the fact that it gets people hyped, right? People are hyped and excited. They think there's money to be made, and they perpetuate the property gravy train. So, all the stars keep aligning in the right direction to keep the machine going.

And you know, whether supply is being artificially constrained to promote this, I can't confirm or deny, but housing prices certainly haven't gotten cheaper. In the last five years, despite large land releases and large projects to add supply in our major cities.

So yeah, think the role of the influencer is significant. you know, mean, influencers will spruik anything that makes money, diet plans or gyms or cars or whatever, but property is a big one. And they make money on the transaction, right? Whether you make money on your property or find it a suitable place to seek shelter for you and your family is secondary. The actual transaction itself is what unlocks value for the influencer. Because if they can be your agent, they can earn 3% on the transaction. And the state government can earn stamp duty. So that's what keeps the thing ticking along with the promise of riches.

Gareth King (29:56)

Yeah, look, you know, that's, that's a huge other topic we could get so far into now, that the property gravy train, as we know in Australia, I always thought Australia was just crazy for it. But I think in an Australian sense, those finfluencers that you mentioned there, they can potentially be so much more effective and successful because we've thrown so many of our nation's eggs into this one basket, which is property. And it is quite a myopic national obsession.

But where that leads me now is to, you know, I've got the realestate.com.au app on my phone, but one thing I noticed that it does is as soon as there's an interest rate announcement, it's sending out notifications. It's constantly sending out things like which suburb is great to buy, which thing's going to boom, which is looking like it's going to fall, where's the best growth? And I can imagine that the FOMO that people get is feeding into this gravy train.

But how do you think that the technology that we've built, and all become so accustomed to, which is notifications, constant stream, is playing into this FOMO, buy everything you can, make as much money as you can out of it, and then obviously had a knock-on effect to the rental property markets. Is this something that is a recent phenomenon, do you think, or is it just a modern version of?

Thomas Sigler (31:11)

It's a modern version of it, but I think it's certainly accelerated. There's no question about the fact that it just creates this dopamine hit every time there's a rate cut because people multiply their mortgage by 0.25%. And they say, ooh, honey, we've just saved 300 bucks a fortnight. Let's pay off our mortgage faster. Let's send our kid to a better school or whatever.

The excitement for property in Australia is like no other place I've seen. The only place I've seen that even comes close is Ireland. I do see lot of parallels between the Irish penchant for gambling. Australia, statistically, is the number one gambling country in the world. That's a fact. It's almost like the punt, right? It's the property punt.

These apps, just like you have Ladbrokes and your various gambling apps on your phone that are ticking away telling you that the Broncos are up or the Seadogs are down or whatever, you've also got a property app telling you your property's gone up $4,000 in value. Your interest rates have come down. This constant endorphin and dopamine hit to your brain, sending signals, positive signals, and FOMO signals.

And then the FOMO creates this extreme paranoia that if you're not in, you're out. And so, it just fuels this huge thing. And so, the platformization of it, as I mentioned, going back to an earlier statement, it is providing informational overload, which is a very good thing, transparency-wise, but that informational overload also just causes us to go crazy.

Gareth King (32:40)

Hmm. And I think going crazy is the right way to say it. And I think, you know, looking at those finfluencers that you mentioned earlier, there's this dude I've seen videos of, I don't know what his name is or anything. I know he has a red hat sometimes, and he's just constantly talking about buy this, buy this, buy this.

I can imagine there's so many people like this guy out there, but if they're leveraging up to buy more properties as investment properties, they're going to be putting them into the rental market, right. Like how many people are buying an investment property to hold? So, is this adding properties to the rental market or does that only happen with new builds?

Thomas Sigler (33:21)

The short answer is that about a third of the properties in Australia are rentals. So, from what I understand, about a third are owned without a mortgage. Although that number is shrinking, I think it's shrunk to 25 or 30%. About a third are owned with a mortgage and that's increased to I think 40 or 45%. And then about a third, so somewhere around 30% are rentals. And that number has actually been pretty stable, at least for the last couple of decades.

So, the short answer to your question is no, this is not adding a meaningful number of rentals to the market. It's all about churn, because at some point most renters become owners. And then maybe later in life, when you downsize, you can become a renter again, but there's a, there's a life cycle to it and people progress through that life cycle.

Gareth King (34:02)

I mean, that makes total sense, and I think that it is a multifaceted issue. But what leads people to claim it's a rental crisis? Like what other aspects are causing this situation?

Thomas Sigler (34:14)

Yeah, so when people say crisis, they're actually referring to two distinct but interrelated things. On one hand, you have a relative crisis, which is relative to cultural expectations around homeownership. It's the fact that a working couple cannot afford the average home in most Australian cities.

The reason it's a crisis is because it's such a rapid shift in social and cultural expectations that a household on $200,000 by any standard definition cannot afford a house anywhere near the centre of Sydney is considered a crisis.

The more acute crisis of course is the absolute crisis, which is that the number of dwellings doesn't match the number of people in need of dwellings. And that has led to the worst outcome, is homelessness. And the unhoused population of Australia has been growing, and the ability of shelters and other accommodation to deal with it has been, I wouldn't say dwindling because there's certainly a lot of capacity, but there certainly could be more capacity.

So the crisis, it's a tough one without getting too sort of abstract, but you could argue the crisis is manufactured. My colleague Cameron Parcell, who's one of Australia's leading homelessness researchers, argues that homelessness is a choice, and that if Australia were to actually just buy a one-bedroom unit for every Australian who's homeless, it would be far cheaper than the social cost of homelessness itself, which often leads to things like incarceration, mental health services, social services of various kinds, medical services, that it would be far cheaper.

But that would destabilise the property ownership structure. Keeping the property ownership structure stable, and keeping property and land rights ticking along under the capitalist framework we're used to supports the system. And so therefore society, the social contract we've established in Australia in 2026 is that a certain amount of homelessness is acceptable.

The other thing I'll say about homelessness, which is slightly anecdotal, is that we've gotten rid of a lot of caravan parks. So historically, a lot of people who are struggling to get into the mainstream housing market lived in caravan parks. And that was seen to be a pretty good alternative and pretty cheap. And as places have gentrified and that land becomes valuable, they've been turned into housing estates that are unaffordable. So that's, and that's something I found, for example, in my research in Byron Bay, that Byron Bay had hundreds of dwellings, I mean tents and caravans, but those are dwellings, available for marginal populations historically that have been removed.

Gareth King (36:47)

Hmm. Yeah, that's an interesting point too, which I don't think gets enough mention in this topic. And I think, you know, hearing you put it into words there, we all know it, but just hearing you say it, that it's the choice that we've made, a certain amount of homelessness. Obviously, that is, that is a choice, but what do you think's led to this point?

You know, I've seen the charts of how much social housing various governments have built through the years. Like you mentioned something there that it would affect the property ownership percentage or situation, is that, would you say that's the main reason they don't do it? Or is it a lack of funds? I mean, they've kind of allocated all their construction resource onto, you know, infrastructure projects, or a combination of all of those or something else even?

Thomas Sigler (37:32)

I genuinely think there's, I mean, I'm not an expert in the federal budget, but I genuinely think there's plenty of money in the pot for what I would call extremely necessary services. I think it's a lack of willpower, not by any political party or politician, but by society, as part of the social contract to rupture the property ownership system. Because if you deviate from the current regime of land rights, you're effectively saying that million-dollar property you own, you only own it with an asterisk, because if the tenant can't afford it, they can always go somewhere for free.

But right now, what you're saying is if the tenant can't afford the cheapest rent, they have nowhere to go, which forces them to pay astronomical amounts of money for the cheapest rent they can find in Western Sydney.

Gareth King (38:20)

Yeah, look, it doesn't sound great. And it is something that I've seen said quite a lot that people will do just about anything to avoid losing that roof over their head. So, if you're getting to the stage of where you are losing it, you've got to be pretty desperate and completely out of options.

We've spoken a lot about the ways that technology has impacted not only the availability of properties, but also how people can look for them, find them, apply for them, et cetera. What would you say would be the best thing that technology is doing for people looking for housing at the moment? And what would you say would be the best possible thing it could do into the future?

Thomas Sigler (38:59)

So, I think the integration of governance and digital technology will really need to evolve. I mean, digital technologies have an amazing ability to do a lot of work very quickly. And if the technologies were properly regulated, and properly administered, they really could do a lot of the heavy lifting in terms of equity and access to information.

And the inverse can also be true. They can also be captured by the wrong people. You know, you typically don't own any of the data. It's typically owned by the platform and that platform is increasingly a very large multinational company, that has very clever IP agreements to stop you from getting your information back. Your credit score is also owned by ratings agencies. People have very limited ability to alter their credit score once it's bad. And so that can preclude you from everything from getting an apartment to buying a house, or even you could be approved for a home loan, but not at acceptable interest rates. You could have to pay an extra percentage if you're deemed to be uncreditworthy because of a mistake you made when you were younger or because of some outstanding debt that your partner had.

So again, really setting some firm parameters around how these digital tools can be used, around how individuals are empowered to access their data and amend mistakes. I've heard of credit rating agencies often misusing information, for example, from buy now, pay later applications. So, after paying things, people may have taken out a loan to buy a sofa and not realised it would hit their credit score by a hundred points.

So that's stuff that most people don't have much agency over and don't have much knowledge about. And it can haunt you in really weird ways. So, I think A) digital digital integration with regulation, having a watchdog that's capable of overseeing the range of platforms we use and the integration between them. Having a very clear sense of what regulations and rules apply at what scales. So, a lot of these things are federal. So, your credit rating, for example, is federally regulated, whereas rental markets are locally regulated, at least by the state government in the case of the RTA, and then locally in terms of any local rules that apply to homeownership or rentals.

And ensuring that those levels of government are talking to one another, that the platforms are talking to the government, and then also ensuring that digital technology also evolves very quickly. And so, ensuring that there are regular reviews of digital governance and that the current legislation makes sense.

Because as you know, Australia is very slow to make laws and to do a lot of bureaucratic processes, because in this country, consultation is valued. But that speed comes at a price. And that means digitally enabled tools may not be as quickly or well-regulated as they should be in order to make sure people are getting the best outcomes.

Gareth King (41:53)

Yeah, I mean, that's a great point. Wouldn't this be nice if this all plays out and everyone in the situation gets what they need and it's all safe and transparent. But until that happens, what would you say, just to finish this up, what would you say is one actionable thing people can start doing right now that will help them navigate the current rental market more effectively?

Thomas Sigler (42:16)

I would say being as familiar as you can be with your rights. As a tenant, as a landlord, as a future owner, everyone really deserves equal opportunity to access current legislation. A lot of people are completely unaware of what their rights are or their responsibilities for that matter. So, I mean, when I say rights, also mean the fact that landlords need to uphold a certain code of conduct.

I've been involved in a lot of government consultation around short-term rentals. We discussed code of conduct at length. And one of the things we landed on was that code of conduct was really kind of a responsibility rather than a rule. So, rather than enforcing a code of conduct saying you need to display this and you need to inform people of that, just saying, every landlord or host should be fully transparent with these elements. They should be fully informative to the guest or the tenant with these rules and regulations. And that actually mitigates a lot of the social harm.

You know, a lot of the association with Airbnb is parties, for example. And if hosts just make tenants aware that, you know, you are deemed to be socially unacceptable when your voices are above 80 decibels. I've heard of having decibel meters. And just having a two-way conversation, just saying, look, this is an agreement, it's a short-term agreement, or this is long-term agreement. Here are the rules, and if we break these rules, we just have a conversation and say, look, well, what went wrong here, and it may not be a good fit.

Gareth King (43:43)

Two great points that you've just raised there. One was the information's out there, get familiar with it, and then also just communicate a bit better with each other. And both of those things are made so much easier by the internet and the technology that we've all got in the palm of our hands, or near us at all times.

Thanks so much for that, Thomas. What's on the horizon for you and where can people follow what you're up to?

Thomas Sigler (44:04)

You can follow me on LinkedIn. So, Thomas Sigler at the University of Queensland. I'm currently working on a series of new projects relating to short-term rentals. So, we're doing a few different things. One of them is testing the impacts of the 7.5% levy in Victoria. We're also going to be testing some of the impacts of the nightly caps that have been implemented in New South Wales and soon to be Queensland, around the number of nights a property can be on the short-term rental market, both minimums and maximums and, just in general, our group is very interested in sort of housing and digital platforms as they relate to housing.

Gareth King (44:40)

Be good to see where that data ends up for everyone that wants to follow along. Thomas, thanks so much for your time.

Thomas Sigler (44:45)

You're very welcome, Gareth. Nice talking to you.