Aussies call for rent control as rental prices soar

As Australia's rental prices continue to climb, tenants are crying out for rental controls. Data from the Reserve Bank of Australia reveals that advertised rents have surged by 25 per cent since 2019, and given the simultaneous decline in vacancy rates, the upward trajectory of rental prices shows no signs of abating.

Recent research from Finder further underscores the urgency of the situation, indicating that nearly half of renters (45 per cent) found it challenging to meet their rent obligations in April. Moreover, an overwhelming majority of Australians (83 per cent) are advocating for the introduction of rental controls.

Also by Graham Cooke:

• Property hot spots: The suburbs still looking good for investors

• Rate relief: Mortgage holders could see cuts 'within months'

• Renters doing it tougher than homeowners with each interest rate rise

This rental squeeze can be attributed to various factors, including the twelve consecutive cash rate increases, which have added over $12,000 to the annual cost of servicing an investor home loan. This, coupled with rising property costs, has resulted in landlords passing on their increasing expenses to tenants​.

The renters under the most stress

Data from CoreLogic shows that rents have increased by an average of 10 per cent nationwide in the last 12 months, with median asking rents peaking in Sydney ($660 for houses and $560 for units), Melbourne ($480/$450), and Brisbane ($550/$475). And the trend isn’t confined to the capitals - all regions across Australia have seen rent increases since 2021, a stark contrast to the COVID-19 pandemic period when rents fell in many suburbs close to central business districts.

And these skyrocketing rents have placed an enormous strain on renters, with some suburbs experiencing average increases of over $600 per month. Soaring rents have resulted in almost one in two renters struggling to keep a roof over their head, while only a third of mortgage holders are in a similar position.

Renters, who tend to be younger Australians, often have lower savings buffers and are thus more susceptible to stress due to the rising cost of living. Since late 2021, the rental market has been tightening, with declining vacancy rates making it increasingly challenging for potential tenants to find suitable properties. The resumption of international migration, particularly among students, has only served to further intensify the demand for rental properties in major cities.

Home ownership goals have also been sidelined

As we entered 2021, 22 per cent of consumers expressed their belief that they would never be able to afford homeownership. Recently, this cohort has grown - with over one in three respondents (35 per cent) echoing the same sentiment by February 2023. The high cash rate has led to many consumers being priced out of homeownership, thereby creating a tight rental market and exacerbating the problem.

So grim is the situation that almost one in three (30 per cent) renters have taken extreme measures to secure a tenancy, including nearly one in ten (9 per cent) tenants offering to pay several months of rent upfront. Similarly, 8 per cent have offered to pay above the asking rental price, thereby further inflating the rental market.

Growing calls for rental controls

In the face of increasing rents, tenants should initiate a dialogue with landlords. Not only do landlords generally want to keep good tenants, there is also some space for negotiation - as landlords must bear the cost of finding new tenants. Additionally, it's worth noting that landlords are prohibited from increasing rent more than once every 6 or 12 months, depending on which state you live in.

Given these conditions, it's evident that policymakers need to heed the growing calls for rental controls. As rental prices continue to ascend and as more Australians allocate a larger proportion of their disposable income to housing costs, the state of the rental market carries significant implications for the wellbeing of renter households, consumption and savings patterns, and inflation.

In the meantime, resources like Finder's renting guide can provide invaluable assistance in these challenging times. The guide includes rental application tips, contacts for tenant advocacy organisations in each state, and even advice on how to transition from being a renter to a homeowner. These resources could prove invaluable for many Australians navigating these challenging times.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.