The wolf at the door for renters

Are we normalising ruinous rents?

Technology was meant to make our lives easier, but it’s also accelerating some pretty brutal behaviours. An article by Garrick Small in The Conversation reveals that a suite of new apps marketed as enhancing ‘fairness’ and ‘transparency’ are actually pitting renters against each other in the sort of auction no one wins (except the landlord).

As those renting in Melbourne, Sydney and Brisbane can attest, the housing market is already cruelly expensive for many renters. While online tools like Facebook and can help find accommodation and flatmates, apps like ‘Rentwolf’ mean renters are competing against each other to get leases which is forcing prices up in the process.

“A transparent marketplace connecting renters and owners” sounds like a real benefit. For the owners, maybe, but not for the renters.

Auctions work against rational decision making because they trigger an emotional response – they combine the desire to win with the fear of losing resulting in overbidding, or what is known as the ‘winners curse’ – in other words the final bid is often over the rational price, making that bidder a winner and loser at the same time. The more this happens, the more normal these exorbitant rents become.

An app connecting renters, rather than dividing them, would seem to be the next step. Let’s hope it brings out some mutually beneficial behaviours and take some of the stress out of the rental market.

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Wolf by NPS Photo/Tim Rains via Flickr