Renters across Australia have endured a torrid time of things over the last year. From regional areas to capital cities like Brisbane, it’s becoming harder and harder to get into a rental property. There are reports of queues down the street just to get an application in to a property, and the asking rental prices are sky high.
Let’s face it, we’re in something of a rental crisis. The bad news is, things don’t seem to be getting better. As inflation creep towards 8% and the Federal Reserve consistently puts up the cash interest rate, people with variable mortgages are seeing their monthly payments go through the roof. This is only going to get passed onto renters, so we’re going through the biggest rent rises in 14 years in Australia!
A new Proptrack Report actually shows that rental prices have increased at the fastest quarterly rate ever, with the national median now sitting at $480. And it’s not just that prices are high, there’s very little supply on the market, and vacancy rates are very low. Vacancy rates are at 1.7% across the capital cities and have tightened up considerably over the last 12 months from where it was sitting at 3.2%.
Why Are the Rental Woes Continuing?
We’re emerging out of the pandemic, and life is getting back to normal in that regard. So why is there such an enduring rental crisis in the country?
Post-pandemic working lives are returning…
Well one reason has to do with the fact that work schedules are returning to normal. During lockdown many people migrated to regional areas away from the cities. Now tenants are returning to their jobs in urban areas, particularly capital cities, and looking for accommodation. Foreign workers and international students are also returning, further increasing demand on the market.
Increased migration as borders open…
We’ve also had a surge of Australians returning home from overseas to escape lockdowns there. Foreign workers and international students are also returning, further increasing demand. This increased population pressure has placed even more heat on the rental market.
Low rental stock…
Low levels of available rental properties is also putting upward pressure on prices. Less supply means higher demand, which means higher rent prices. Available rentals across the country are at their lowest level since 2003, with the number of listings decreasing 20.3% year on year, according to Proptrack.
High interest rates are keeping new investors out of the real estate market, with new lending to investors down a considerable amount. Having fewer investors purchasing homes to rent out is contributing to the low levels of stock available.
Is There Any Relief in Sight?
Unfortunately, the rental crisis looks like it’ll persist for some time into the future. As pandemic migration rules lift more and more people are entering the country, placing more pressure on the tight market. Although there has been some easing of pressure on regional areas, as tenants flock to the capital cities for work.
With investors less eager to enter the property market and a decline in new construction approvals, the supply problem isn’t going to be rectified any time soon. This means that for tenant for people looking for a home, the pain is set to continue for a while to come.
Let’s Talk About Real Estate
If you decide buying a home is the way to go, or you want to talk about property prices in your area and what they mean for your home, get in touch with The Henry Wong Team®. We’re always here to help and to talk about all things real estate.