A recent report from “The Times” sheds light on the escalating predicament faced by tenants across major Australian cities, as rental rates for apartments have surged by a staggering 26.1% on a year-on-year basis as of June.
This substantial surge significantly overshadows the 3.6% increase in the wage price index reported by the Australian Bureau of Statistics (ABS) over the same 12-month timeframe.
Across prominent urban centers, the average cost of renting houses has witnessed a remarkable 11.5% increase in the past year, a growth rate surpassing wages by more than threefold. Matthew Hassan, Senior Economist at Westpac Bank, underscores the gravity of the rental market’s predicament owing to acute housing shortages. He remarks, “For renters, especially those on limited or fixed incomes, this represents a critical issue.” Hassan attributes this situation to the pandemic-driven trend of seeking more expansive living spaces, which, in turn, has led to reduced household sizes. Additionally, reduced housing supply due to elevated construction costs and increasing interest rates has collectively elevated the demand for rental properties.
Joel Dignam, Executive Director of Better Renting, underscores the dynamics of the current rental landscape, where landlords, capitalizing on a tightly held low vacancy market, have been able to consistently escalate rents, thereby claiming a larger portion of tenants’ income.
Meanwhile, as detailed in reports by RealEstate.com.au, the city of Melbourne is grappling with an alarming shortage of available rental properties, with merely 1.41% of potential rentals being open for occupancy in July. This already concerning figure has remained relatively static during the winter period, staying in proximity to historically low levels. However, recent developments indicate that Melbourne’s rental vacancy rate has experienced a year-on-year decrease of 0.82 percentage points, marking the most substantial decline among cities nationwide.
Over the past year, the average rent for conventional residences in the city has surged by AUD 40 (equivalent to an 8.7% increase) to attain a weekly rate of AUD 500, with the scarcity of available units being a prominent contributing factor. The scenario is equally compelling for unit apartments, where weekly rental rates have escalated by AUD 70 in comparison to the previous year, reaching a remarkable AUD 2080 per month, signifying a notable 17.1% increase.
Consequently, the mounting economic pressures have precipitated a substantial number of young individuals to explore property ownership as a more viable alternative. As this issue continues to unfold, it underscores the growing complexities of the Australian housing landscape.
Source/References: ABS, realestate.com.au, The Times