As people across the country grapple with the current rental crisis, renters in two Australian cities have been singled out for some very bad news.
While home prices could be falling across the country, rental costs certainly aren’t. New data shows two Australian cities in particular are facing rapidly rising housing costs.
Renters in almost every part of the country have been feeling the sting of rising prices since the pandemic began, with the situation worsening in recent months.
Now, PropTrack’s June 2022 quarterly rental report has revealed that the rental market is likely to continue to heat up, with Sydney and Melbourne feeling the brunt of the crisis.
The report found that a limited supply of rental properties is fueling competition, with new registrations in June 2022 down 13.8 percent from the ten-year average.
The number of tenants per rental property listed on realestate.com.au is up 28 per cent year-on-year in major cities, with Sydney and Melbourne seeing the largest increases.
Cameron Kusher, PropTrack’s director of economic research and report author, said rising prices for rental apartments in major cities will continue for some time, especially as post-Covid activity returns to those areas.
“With overseas and interstate migration returning, with borders now reopened, it seems likely that rental conditions will continue to tighten in the coming months,” he said.
“This is likely to be most evident in Sydney and Melbourne, where rental demand and prices have fallen during the pandemic but are now recovering quickly.”
The report also noted that the new fiscal year means higher property tax burdens for investors and higher interest rates in many jurisdictions.
As a result, many landlords will likely try to pass these rising costs on to tenants where they can, resulting in even higher rents.
Rents in Sydney have increased by 6 per cent and 3.7 per cent over the past year.
Rental growth was also more than five percent in all other capital cities.
The average rental price for a house in Sydney is $620 per week and $500 for a unit, compared to $495 and $410 for rentals in the NSW region.
In Melbourne, the average weekly price for a home is $450 and $400 for a unit, respectively, compared to $420 and $330 in the Victoria area.
Nationally, the average weekly rent for a home is $490 and $440 for units.
The largest year-on-year rent increases were in Darwin (14.6%), Adelaide (10.3%) and regional areas in South Australia (17%) and Western Australia (12.8%).
The PropTrack report found that rents have risen at their fastest pace in seven years, with median weekly rental prices up 7 percent compared to June last year.
However, there could be some good news for those in regional areas, with Mr Kusher saying there are signs the crisis is easing in some areas.
“There are already some signs that rental pressure is easing in certain regional areas as more inventory becomes available for rent and properties take longer to lease,” he said.
“That is logical as the momentum for regional shift has waned as major cities have reopened. Some people who moved during the pandemic will now return to the big cities, while others who choose to stay will try to buy a home of their own.”
This will be welcome news for thousands of Aussies, some of whom have even been left homeless as a result of the rent crisis.
But for other parts of the country, rental options are likely to remain extremely scarce going forward, with Mr Kusher saying it was “unlikely” to see a remedy anytime soon.
So what is the solution to the crisis? Other rental properties.
Unfortunately, increasing the number of rental properties available is easier said than done.
“Increased buying by investors is countering this, but it will take some time for the existing pressure to dissipate,” he said.
“Federal and state governments continue to offer incentives to first-home buyers. With house prices falling and rents rising, this could encourage some to switch from renting to owning.
“Over time this could ease the pressure on rental supply, but it will likely be largely offset by the return of overseas arrivals, most of whom are looking for rental accommodation on arrival.”
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