Received

How quickly people form bigger households and take demand off the rental market remains an open question in the battle against red-hot inflation.

Reserve Bank head Philip Lowe remains worried about dynamics in the rental market that are driving up prices and could complicate the task of bringing inflation back to target.

The governor used an appearance at a Senate committee to explain there were two major factors pushing up demand for rentals - people taking up more space during the pandemic and the population boom since borders reopened.

Dr Lowe said new supply would ease cost pressures but would take time to come online and in the short term, the primary way rents would fall was through denser households.

By that, he meant rising rents would likely keep adult children living at home for longer and nudge people to bring in a housemate.

The latest statement of monetary policy from the central bank suggested average household size had been increasing in recent months.

CoreLogic head of research Eliza Owen said there was evidence of demand pressures cooling off in regional markets but capital city markets were still well below pre-pandemic levels.

Ms Owen told AAP high wages growth and the strong labour market may be helping wealthier households hold on to their larger rentals.

Plus, people were often reluctant to downsize, which she said may help explain the persistence of low household size even as rents were surging.

"But as cost of living pressures increase and the labour market loosens in the year ahead, we may see people with no choice but to start renting out spare rooms, or moving out of one-bedroom dwellings," she explained.

The Demographics Group director Simon Kuestenmacher said the number of people per dwelling had been trending down for some time.

"We do have quite a few spare bedrooms in the country," he told AAP.

The demographer said one way people were already adapting to price pressures was by staying with their parents for longer.

But Mr Kuestenmacher said this was not an option for all groups, including first-generation migrants.

Another factor weighing on the average household per dwelling is longer lifespans.

Now that people are living longer, Mr Kuestenmacher said there were a lot of older couples and widows living in three or four-bedroom homes.

While he stressed people had a right to age in the homes of their choosing, he expects governments to start introducing more policies to incentivise downsizing.

Better Renting executive director Joel Dignam said it would be preferable not to be in a "scarcity situation" where people were forced to squeeze into homes by sky-high rents.

Ideally, there would be enough quality rentals in the appropriate locations to give people the choice to live alone or with housemates as preferred.

In addition, there was a demographic shift under way that had people renting until later in life and often share housing for longer.

"It can be challenging sharing a space with other people, especially once when people taste having extra space," Mr Dignam said.

The head of the tenant advocacy organisation also said the onus was often on renters to adapt their lifestyles in the face of economic challenges.

While owner-occupiers were also experiencing price signals to rent out their spare rooms, he said tax exemptions incentivised owners to hang onto their big houses as a store of wealth.

© AAP 2023

Federal Education Minister Jason Clare said changes to student debt would lead to fewer people attending university, as millions are set to fork out more for their tertiary studies.

Student debts rose on Thursday by 7.1 per cent, with more than three million people set to pay more.

Higher education loans are indexed in line with inflation on June 1 each year, but runaway price rises have caused balances to spiral and many graduates are tipped to be worse off than when they finished their studies.

But Mr Clare brushed off calls to make higher education free for students.

"If we make a change here, what this means is that taxpayers in all of our electorates have to pay more ... that's taxpayers paying $9 billion more," he told parliament.

"It means that fewer people go to university, not more, just a lucky few, a privileged, and I want more people to go to university."

Modelling conducted by the National Tertiary Education Union found loan increases may blow out repayment periods for some university degrees to more than four decades.

Business management graduates are likely to be the worst affected, owing nearly $120,000 over a repayment period of 44 years.

A humanities and social sciences honours degree could take 40 years to repay and cost $110,353.

The union's national president Alison Barnes said many students would spend most of their working lives paying off the debt.

"This is not what higher education should look like. It's a barrier to equality which must be a core principle of our universities," she said.

"Education is a fundamental right and should not lead to decades of financial burden. We need to address this issue."

Universities Australia chief executive Catriona Jackson said she understood the concern of students, who would have to back thousands in debt.

"While the size of the debt will get bigger today, it doesn't mean you are paying more next week out of your tax or the week after or the week after ... it's that the term of the loan gets longer," she told ABC Radio.

"When we had, in inverted commas, free degrees - they were never free. The taxpayer paid for them. A very small proportion of the population went to university."

Greens senator David Shoebridge said young people had been further disadvantaged by the indexation rise.

"Their rents are going through the roof, but their wages are stagnating, and ... hundreds of thousands of them have just been hit with an extra bill from the Albanese government," he told reporters.

The gender pay gap means female law graduates could take 36 years to pay off their qualification, four years longer than their male colleagues.

The federal government is set to profit about $2.5 billion off the back of student loan indexation this year.

Jane Body, 32, holds a bachelor of international relations and politics, a masters in business administration and a student debt of about $78,000.

If indexation continues to be tied to inflation, she's worked out she will be paying off her student loan until at least the age of 65.

"Young people are quite often left out of economic discussion and policy-making decisions (but) a lot of Australia's policies are directly or indirectly age-based," she told AAP.

"Many policies are in favour of older generations at the expense of the younger generations."

© AAP 2023

A generation of higher education graduates will be saddled with student debt well into retirement if changes are not made to the way loans are indexed.

More than three million Australians have woken up to a student debt increase of 7.1 per cent.

Higher education loans are indexed in line with inflation on June 1 each year, but runaway price rises have caused balances to spiral and many graduates are tipped to be worse off than when they finished their studies.

Education Minister Jason Clare said while the average cost of HECS had gone up by $1700, it would not affect how much students pay back each year.

"HECS is not like a mortgage where when interest rates go up, your repayments go up. The amount that you pay each year is based on your income," he told Sydney radio 2GB on Thursday.

"If you go to uni, it makes you money. If you go to university, you're going to have a higher salary than if you don't."

Modelling conducted by the National Tertiary Education Union found loan increases may blow out repayment periods for some university degrees to more than four decades.

Business management graduates are likely to be the worst affected, owing nearly $120,000 over a repayment period of 44 years.

A humanities and social sciences honours degree could take 40 years to repay and cost $110,353.

The union's national president Alison Barnes said many students would spend most of their working lives paying off the debt.

"This is not what higher education should look like. It's a barrier to equality which must be a core principle of our universities," she said.

"Education is a fundamental right and should not lead to decades of financial burden. We need to address this issue."

The gender pay gap means female law graduates could take 36 years to pay off their qualification, four years longer than their male colleagues.

The federal government is set to profit about $2.5 billion off the back of student loan indexation this year.

Greens senator David Shoebridge said young people had been further disadvantaged by the indexation rise.

"Their rents are going through the roof, but their wages are stagnating, and ... hundreds of thousands of them have just been hit with an extra bill from the Albanese government," he told reporters.

Jane Body, 32, holds a bachelor of international relations and politics, a masters in business administration and a student debt of about $78,000.

If indexation continues to be tied to inflation, she's worked out she will be paying off her student loan until at least the age of 65.

"Young people are quite often left out of economic discussion and policy making decisions (but) a lot of Australia's policies are directly or indirectly age-based," she told AAP.

"Many policies are in favour of older generations at the expense of the younger generations."

Ms Body is the general manager of Think Forward which advocates for intergenerational fairness issues to be central in Australian politics.

"We are calling for a freeze on indexation so that at the very least we have time as a nation to have a conversation about how we can do this better," she said.

Indexing student loans to wages growth rather than inflation could be a fairer system which would match the value of different degrees, she said.

© AAP 2023