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Much of the housing policy focus during the pandemic has rightly centred on the plight of people who are . Another strand of commentary has focused on a likely .

But what does the pandemic mean for housing market inequalities in Australia? And what are the policy implications?

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The renter-owner gap will widen

Despite concerns about house prices plummeting, the spread of COVID-19 is exposing a widening gap in housing markets between those who own zero housing wealth (renters) and those with substantial housing wealth (owners).

Australians with little to no housing wealth were already experiencing at least three key types of vulnerabilities before the pandemic in the form of work insecurity, financial stress and ill-health.

The charts below show the comparisons between renters and home owners in these three categories of vulnerability, using data from the . Owners are ranked in quintiles by housing equity, from the bottom 20% (Q1) to the top 20% (Q5).

Renters were much more likely to be unemployed or in casual jobs than people with high housing wealth.

Both renters and owners with low housing equity were more likely to have difficulty paying their rent, mortgage and utility bills on time. They were less likely to be able to raise emergency funds when needed.

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Renters were also more likely to report poorer physical and mental health.

The spread of coronavirus has added to these existing vulnerabilities. Casual workers have been .

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The is well-known. People on the bottom rungs of the socioeconomic ladder tend to be in poorer health. They are then more likely to develop serious .

Post-pandemic markets will add to inequalities

COVID-19 is making existing economic inequalities worse. And even in a post-pandemic world it can be expected to slow down wealth accumulation among renters.

is a term used to describe an economic event that persists into the future, after the factors that led to the event have disappeared. In labour markets, the long-term unemployed also suffer long-term damage to their job prospects as their skills deteriorate and they are regarded as less employable.

This hysteresis effect will likely spill over into housing markets. Any crisis-driven falls in house prices may be short-term as by record low interest rates. People who are exposed to job loss, insecure work or ill-health during the crisis will face a greater struggle to regain their economic footing after the pandemic than those from more affluent backgrounds.

This means the wealth-accumulating capacity of people with little to no housing equity is further compromised during and after the pandemic. In short, renters could fall further behind in their ability to buy a home. The gap between the haves and have-nots will grow.

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3 principles for post-pandemic policy

An even more unequal housing future for Australia is undesirable. The post-crisis housing debate will need to be conducted with three key elements in mind: equity, solidarity and security.

Equity in access to housing opportunities must not slide off policymakers’ radar. It is not a debatable fact that governments have long provided for property buyers. These measures include , family home exemptions from and , and .

These preferential tax treatments have . Notwithstanding the , restoring some balance in the distribution of subsidies between owners and renters is essential to narrow the widening chasm between them.

Solidarity between generations will be more crucial than ever before to preserve Australia’s social and economic fabric. The created in response to the crisis will likely be a multi-generational burden.

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Some might be tempted to return to pitting the young against the old in housing debates. Policy thinking that encourages solidarity, rather than stoking tensions between generations, will be increasingly important. For instance, will remove a key financial barrier to home purchases for both young first-time buyers and older downsizers.

The formation of the national cabinet to oversee the response to COVID-19 also provides a post-pandemic forum to forge federal-state cooperation on the required reforms. Federal support will be needed to help cover state revenue shortfalls in a . On the other hand, the release of housing equity by older downsizers should ease .

Finally, it is time to reprioritise . Critical public health measures to avoid the spread of disease, such as social distancing and staying at home, are inherently shelter-related. These measures are rarely achievable for .

, Professor of Economics, School of Economics, Finance and Property,

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