We’re sure you’re familiar with the extent of the rental crisis in Australia. The ‘race for space’ is on the verge of being out of control, with stories of families having to live in garages while they look for a home, rental inspection queues stretching down the street and all-out bidding wars happening for vacant properties.
Experts are saying we’re in a rental crisis, and by all accounts it looks like they’re right. The unfortunate news is that things don’t look like they’re going to improve anytime soon. There’s one standout reason for this…
International Students are Back in a Big Way
International students are back. It’s not like there’s one or two of them arriving for the start of a semester, they’re literally returning in their droves! Great for the economy, but it’s creating another headache for the stretched rental market.
In February this year alone 142,000 people arrived on our shore with a valid student visa. That’s 190% more than for the same month last year! It’s not just students coming to Australia, as our borders are now fully open once again for migration. According to the Financial Review, “Treasury forecasts an influx of 650,000 migrants between this financial year and the next.” That’s going to put an extreme amount of pressure on the rental market.
Let’s look at the immigration figures in another context…
Overseas Online Interest in Rentals Surges
The opening of borders and the upsurge in arrivals has led to huge increases in online search activity for Australian property. That’s not just renters either, the number of immigrants looking to buy property has also increased.
According to Proptrack, “rental property searches in the past three months are up 34% on the same period in 2019, and searches to buy properties are up 29%.” While this may have a silver lining for vendors, it looks like the woes of those looking to rent a home are set to continue.
What countries are seeing the biggest uptick in searches? Well in China there’s been an increase of 54.6% in Australian rental searches in the last year. The UK has seen a 54.2% increase, and New Zealand a 37.5% increase.
How Bad is the Rental Problem?
Nobody is sugar coating this issue, because it really is negatively impacting people’s lives. So yes, the rental problem is bad.
Let’s look at some statistics. According to the Housing Industry Association, rental costs grew by 17.6% for units and 14.6% for houses in capital cities last year. There’s no sign of these slowing down in the year ahead.
Residential vacancy rates are also at crushing lows, with a national rate of 1.1% and it going as low as 0.5% in Adelaide. Further exacerbating the problem is that nationwide building approvals have fallen through the floor, with the first quarter of 2023 proving the weakest in over 10 years. One report suggests Australia will fall short of its housing needs by 106,300 between 2023 and 2027.
What is the Solution?
Is there a silver bullet here for the rental crisis? We don’t think so. This is going to take a long time to correct itself. The most immediate relief for renters looks like it’ll come in the form of rent relief from the government, which has been shown to reduce housing stress. But at the current rates of rent seen in capital cities around the country, rental assistance is simply too low.
More purpose built student accommodation would help relieve the pressure created by international student arrivals, as would more homeowners taking in students to live with them.
Ultimately, if you’re looking to avoid the rental crisis then purchasing your own home is an option definitely worth considering. You never have to worry about the ‘race for rental space’ again, and you’ll be making a solid investment into your future and that of your family. If you have any questions about purchasing real estate, get in touch with The Henry Wong Team®.
If you’re a seller and you want to take advantage of the large number of buyers looking for a home, Henry would love to help. He has an extended network of contacts both locally and overseas, waiting to be leveraged in the sale of your home and set you onto your next chapter in life! Get in touch today.
