Rental crisis: Warning for tenants as costs rise and vacancies drop again
A “mini-reprieve” for tenants in Australia is over as vacancies drop again and rents continue to rise, with fears the tightening market will leave more Aussies without a home.
The number of homes available for tenants to apply for dropped again in August, with new data indicating there were just 35,425 properties on the market nationwide. On top of this, asking rents jumped again, month on month, marking an annual weekly increase of $52.64 - or $2,737 a year.
Sydney remained the most expensive capital to rent a house, at $977.65 a week, nearly $200 more than the national capital city average.
Also read: How ‘stalking’ helped this Aussie secure a rental
Also read: 3 clear signs the rent crisis could ease next year
Also read: Rent crisis: Aussies overlooking these ‘hazardous’ property flaws
Capital cities faced bigger weekly hikes than in regional areas, up $101 for houses and $87 for units. If you’re looking at the yearly household budget, that’s an added $5,253 and $4,531, respectively, for those moving house.
The New South Wales capital also copped a drop in vacancies, with a bump in the CBD for July falling back to 4.6 per cent. People in regional areas were also left with fewer options when searching for a new rental.
Nationwide, those renting a unit were being asked for an average $588 a week. The most affordable capital to rent in was Adelaide, at $437.87 per week.
In some good news, there was a fall in asking price for some parts of the country, including Canberra and Hobart, while Melbourne and Brisbane CBDs reported an uptick in available rental properties in the last reporting period.
Tightening rental market pushing Aussies out of a home
The numbers indicate a downward trend for new rentals coming on the market. Louis Christopher, managing director of SQM research, which collated the latest data, said this would put a further squeeze on tenants searching for a place to live.
A modest lift in vacancies at the start of the year, particularly in regional areas, was fuelled by people biting the bullet and taking up share-house accommodation, but Christopher said that “mini-reprieve” was over.
“In more recent months, the rental market has tightened once again … likely caused by ongoing and rapid increases in our population plus a decrease in new dwelling completions compared to 2022” he said.
The migrant population has grown by more than 700,000 between the 2022 and 2024 financial years.
”Housing formation will continue to contract and, unfortunately, I am expecting a very large increase in homelessness.”
Homelessness Australia CEO Kate Colvin is calling for an additional $450 million to bolster support services, saying “record-low rental vacancies and soaring prices [are pushing] thousands of Australian families to the brink”.
“A 7.5 per cent increase in demand in just four months is unheard of.
“It forces homelessness services to make extremely tough decisions about who gets assistance,” Colvin said.
Queensland had the biggest demand for homelessness services, followed by Western Australia and New South Wales.
What’s the answer to the rental crisis?
There is one thing that could make an overwhelming impact on Australia’s rental crisis and that is increasing supply.
The government’s National Housing Accord has set a goal to build 1.2 million new “well-located” homes over five years from 2024 but experts are concerned that target is too ambitious.
“To achieve that goal, we need to see 240,000 new dwelling starts every year for the next five years,” Domain’s chief researcher, Nicola Powell, told Yahoo Finance.
“Australia, historically, has never been able to do that. The highest we ever got was 234,000 back in 2016.”
She described it as a “stretchy goal” that would require the government lifting the red tape on planning reform and an aggressive approach to get zoning and development approvals over the line.
Whether the construction industry can cope with an increased demand in builds is yet to be seen. More than 2,000 companies have gone into liquidation over the past two years, according to data from the Australian Security and Investments Commission.
A rising cost of materials caused by supply chain issues and the end of pandemic-era stimulus has caused turmoil in the industry.
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.
