Australia headed for rental market calamity

CoreLogic’s latest housing affordability report showed that the proportion of household income required to meet rental costs has surged over the pandemic, led by Australia’s regions:

Australian rental affordability

Another report from CoreLogic, released yesterday, showed that unit vacancy rates are plummeting, in part due to “increased rental demand thanks to the return of overseas migration”:

Rent values for national units rose at a faster pace than house values, with unit rents rising 3.1% over the three months to April…

The strong unit rental growth is being supported by record low vacancy rates. Nationally, just 1.5% of units were observed as vacant over the month of April, down from a cyclical peak of 5.0% in May 2020. In April, the combined capital city unit market recorded its lowest vacancy rate since March 2005 (1.3%) with 1.6% of units observed as vacant, while units across the regional areas recorded the lowest vacancy rate since CoreLogic records commenced in August 2003 at 1.0%.

Rental vacancy rates

Meanwhile, PropTrack director for economic research, Cameron Kusher, noted that “rents are rising pretty much everywhere in the country”, and warned that the situation will worsen as immigration returns:

“It’s extremely challenging, and there’s not much sign things will ease back anytime soon either. We’ll continue to see low volumes of new rental listings”…

“A lot more people are seeking rental properties and we don’t have anywhere near enough properties – ultimately that’s the issue”…

“There has been a real shallowing of the pool available to renters, and at the same time more and more people are looking for rentals”…

“In fact, with international borders reopened and migration recommencing, we are anticipating a further tightening of rental supply over the coming months, which is likely to lead to further increases in rental rates”…

“This is expected to be most prevalent in Sydney and Melbourne”…

Where will all of the new Australians live if we don’t have enough rental properties to house the existing population?

The planned immigration reboot will turn Australia’s rental crisis into a calamity. Yet Australia’s renters were ignored entirely by both major parties over the election campaign.

Unconventional Economist

Comments

  1. Interesting, rental shortage, so they the powers to be say.
    Just thought I do a quick check.
    Elwood Vic price range $0-$625 Qty 759 Properties. Had a quick look at them, doesn’t seem the prices have gone up that much in 5 years (when I last looked)
    Carlton Vic, same paramaters Qty 2000 Properties available
    Given there is approx 9000 dwellings in both suburbs, I am calling B—LLsh–t.

    • We moved out of Brighton, VIC, in Feb. We were smack between Firbank Girls and Brighton Grammar, renting an unrenovated 1960 3-bed bungalow well in need of a makeover. (while next door they tore down and spent $7M rebuilding Warnie’s old place). Owner put the rent up by $200 a month after we left. If the landlord wasn’t such a rich surgeon and had a brain, he’d have done the kitchen and bathroom, painted and re-carpeted and put the rent up $1,200-1,500 a month, easy….way before we had enough of their chronic desire to piss us off and not do any maintenance. Would have paid for itself in a few years and he’d have kept on coining it. Owner’s agent a complete c#nt and muppet. No clues all round. Now I have spectacular views, complete privacy and nice well built home in gorgeous sunny Neslon, NZ. Sure, prices are falling, but my blood pressure dropped like a stone from no longer having to listen to Scomo or put up with living in the worst house in the best street with a dodgy agent unwilling to do anything.

  2. Leroy Huggins

    A rental and house price crisis, begets a demographic crisis, as all but the very bottom and top, delay raising a family until they can afford to house them in decent accommodations. Many still get into their own homes, but later than they otherwise would, and in smaller and more cramped blocks (or apartments), while others miss out entirely.

    So hey voters, do you realise yet that by sticking with the majors NOTHING will be done about any of this and instead they will pursue policies that will make it worse as Labor opens the floodgates with added sauce that they will do everything possible to get migrants PR and citizenship and make it as easy as possible? Plus X more refugees to house.. yippee!

  3. The used to be a function on rpdata or corelogic that let you see how many rental properties where available in any given suburb, does anyone know the url for this feacture or has it been removed?

  4. DingwallMEMBER

    Labor, Libs,Teals and Greens do not give a proverbial flying f*&k.
    They have all cheered and helped build the sad, real estate economy we have. Instead of remedying the root cause, they will attempt something idiotic like offering rental subsidies far a wide…. like FHB and child care, they chuck a few bucks at the issue rather than fix it.

      • DingwallMEMBER

        Allow supply to flow …… pretty straight forward……… instead it is stifled and gated by developers and councils with their self-interest.
        Increase land supply, increase land tax, yada yada yada ….

        • why not just ban land banking? Saw the figures the other day somewhere, obscene.

          • DingwallMEMBER

            Figures? Here on MB? … should post link so we can spread the word.
            Ban or make it very costly …. whatever works

          • I’ll try to remember but I think it was most likely a Twitter link that has since exited my brain.

          • gotta tax the church & their lands and ban ecclesiastical courts first. you will find much land banking there also.

          • Easy solution is to put a value capture onto land banking. Whatever you make when you sell it then the government take say 70% of your profit on the land. It’s done around the world…just not here. I wonder why? Perhaps brown paper bags?

            And then the government should also tax land bankers for not developing it at say 1.5% of purchase value indexed to inflation.

            Trouble is, there’s no will to fix anything, just to hand out used bandaids and call them “Innovative Policies”.

        • I love when anyone says, “pretty simple”, then do it, if it is so simple, you can achieve your suggested outcome by tomorrow.
          Some many people provide ideas, very few can implement them. Don’t take it personally.

          • bubbah buddhaMEMBER

            It really is that simple, if you tax the hell out of every house outside the primary domicile incrimentally it will cause greedy investors with multiple properties to sell, dropping the cost of housing and freeing up rental competition as people buy rather then rent, and reduce rental costs as rental property costs reduce. Tax investment properties incrimentally, that simple!
            Burn the greedy landlords for the sake of future generations

          • Was about to make this same comment. Tax multiple properties progressively like income. Realise there is an element of social need within this class of asset.

    • Be interesting to see the teals statements of investments and interests, and their investment property holdings.

  5. Haven’t pple heard of bunk beds! Every tradie seems to have a habitable tent on top of said instant asset write off gas guzzling ute spare. I jst bought a 6p instant up tent for 250 bucks!

  6. Any comment on the ‘teal’ who wants to pump migration to 220k/yr for 2 years to make up for the missed Covid years?
    Or do we expect more hagiographies on the ‘new suffragettes’?

  7. Just need the occupants per dwelling to go back to where they were pre covid. Interest rates up and a recession will both help this in the right direction. 1st home buyers become 1st home sellers and move back in with their parents. Something else that will reverse is rich folk buying new houses and not selling their existing house because interest rates are low and houses only go up in value.

  8. Camden HavenMEMBER

    The pretty simple approach is to have a footprint outside of the country that tries to turn it’s young and it’s poorer into slaves. Best decision I’ve made to leave.

    • working class hamMEMBER

      You can buy a house on the North Shore of Oahu, basically on the beach, for less than a canal front property in Brisbane.
      Heard Costa Rica was nice as well.

  9. Big business and Allegra Spender need to start providing housing for all the migrants they supposedly need, along with the infrastructure they will also require.