An economic evaluation of rent control and other rental housing market policies in Australia

Abstract

This thesis is a study of the economic effects of rent control and other rental housing market policies. The analysis is conducted in a neoclassical framework, although some peculiarities of the housing market are taken into account. The case for government intervention is considered from both efficiency and equity points of view. The case for intervention on efficiency grounds is found to be very weak. If government has a redistributive objective, housing is one medium by which transfers can be effected. Rent control is the alternative policy which receives most attention. No valid case for rent control exists and rent control is found to be inferior to properly implemented policies of housing allowances and public housing. The apparent objective of rental housing market policies is the bestowal of tenant benefits at the most favourable ratio of benefits to costs. Considerable attention is given to the conceptualization and measurement of tenant benefits from various policies. Another matter which receives considerable attention is the issue of supply response. Various methods of tackling this question are reviewed and time-series analysis of Australian Capital Territory data is undertaken. ) The history of rent control in Australia is reviewed, beginning with New South Wales Fair Rents Act of 1915. Two rent control case studies are reported - Canberra, 1973-1976 and post-war New South Wales. The emphases of the two case studies differ. Rental market regulation, a comprehensive form of intervention in the landlord-tenant contractual arrangement, is described and analysed, with special reference to Australian instances.