Australia’s rental crisis a disaster in the making

CoreLogic has released its May housing and economic chart pack, which shows that Australian rental growth has reaccelerated in 2022, surging by 9.0% in the year to April:

Australian rental growth

Coast-to-coast strong rental growth.

As shown above, the surge in rents is broad-based, with every jurisdiction – both city and regional – recording solid-to-strong rises in rents over the past year.

The surge in rents follows the cratering of vacancy rates, which hit their lowest level in 16 years, according to SQM Research:

Australian rental vacancy rates

Australia’s rental vacancy rates at 16-year lows.

The primary factor explaining the collapse in rental vacancies is the pandemic-induced shrinkage in average household size as people demand more space, which has effectively reduced the number of dwellings available to rent.

Looking ahead, Australia’s rental crisis is set to worsen with the planned rebooting of immigration to 235,000 people a year. This will ensure that rental demand stays well ahead of supply, which will impact inner-Sydney and inner-Melbourne the most given their outsized intakes of international students and migrants more generally.

The budding rental market catastrophe was summed up perfectly by Property Investment Professionals of Australia president Nicola McDougall, who warned that “rental affordability pressures facing many households are only going to get worse – and soon” on the back of mass immigration:

“With overseas migration projected to soar over coming years, where are these new Aussies going to live if we don’t even have enough rental properties to house our current population?”

Exactly. The planned Big Australia immigration reboot will add further pressure to an already record tight market, turning Australia’s rental crisis into an outright disaster.

Sadly, Australia’s long suffering renters are blind to our politicians, who instead prefer to target policy at home buyers to inflate prices and buy votes.

Unconventional Economist
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Comments

  1. In the making? Try this. On your drives around the place, keep an eye out for plain white vans parked in out of the way places, usually bashed up a bit, usually with shields over the windows. There’s your rental crisis.
    Once you start seeing them, you keep seeing them.

  2. With overseas migration projected to soar over coming years, where are these new Aussies going to live if we don’t even have enough rental properties to house our current population?

    Just implement a policy where any rental application has to prioritise Australian citizens over foreigners.

    If someone has to be homeless, ethically it has to be the foreigner.

    • pfh007.comMEMBER

      Middle class blueberry smoothie lovers demand berries picked by well rested and relaxed skilled imported berry pickers.

      They shall have the best spots in the triple bunks.

    • Anybody with any form of ‘progressive’ political bent will be screaming ‘isms” at the top of their lungs should any such proposal even be suggested. The fact that an elected official would seek to prioritise the wellbeing of their own constituents before those mentioned in a UN assembly is deeply offensive to some/many….

      • dennisMEMBER

        I don’t know, I think I’d tend to agree with the “progressive” and may be the one to give up their home for the immigrant and live in a van should be the one who voted that gov in!

  3. RobotSenseiMEMBER

    I think this is going to severely hamper the planned reboot.

    Who would want to come here and pay through the absolute nose for university and rent when you can get pay the same price (or less) to study in the US, UK, or Canada?
    Ditto “skilled” migrants, if their work isn’t putting them up, who’d want to come here for a job and be living transiently for at least a month to secure a rental?
    This could be the best thing to happen to smash the population ponzi. It’s all good when the locals aren’t being put out, but the more and more domestic homeless/people paying out their noses for rent, the harder it is going to be to keep advocating for migration through the roof when Australians can’t afford the rent any longer.

  4. run to the hillsMEMBER

    My neighbour across the hall was moving out this morning, told me because the landlord had just jacked up her rent by $150 a week, a 2br apartment in North Sydney, basically a 20% increase

  5. tmnsoonMEMBER

    I’m in Melbourne’s western suburbs and a few weeks ago just signed the lease on a 3 bed 2 bath townhouse for $430 per week. It was listed for $450 but since no one else turned up to the inspection, I offered $430 and the landlord accepted, because it had been sitting empty for several weeks with little interest from tenants. Apparently $400+ is too much for most people in the west, as I also went to an inspection for a smaller 2 bed unit for $350 and there were 10 other people there.

    It’s really weird because I keep hearing about the rental crisis, but my experience was the exact opposite. It doesn’t seem to be a one-off either because I’ve seen other rentals in my suburb sitting for weeks and weeks with no takers. Prices are also the same compared to pre-pandemic.

    • CutlerMEMBER

      Yep, my experience is similar in Melbourne. Discounting from asking price in many suburbs, I’m in something that 2 years ago was $70 higher per week. They dropped the asking price twice before we picked it up earlier this year.
      We are still watching the market and there’s a lot that keeps getting discounted or sits on there week to week. In the regions I can understand the constraint and I’ve seen that side of it out west, but in Melbourne? I don’t see it at all.

      • tmnsoonMEMBER

        Good to know I’m not the only one. I’m thinking maybe it’s because due to WFH a lot of high income people have moved out to regional “lifestyle” areas, which is why they’re having such a hard time with rentals in the regions, but for us in Melbourne the situation is actually better than pre pandemic. Plus due to no immigration for 2 years any new houses built have relived some housing pressure.

  6. reusachtigeMEMBER

    Poorer and working class Australians are just going to have to accept one family per room arrangements!! Other countries do this just fine. I can’t see why we can’t too.

  7. Not really seeing any crisis in the inner west and eastern suburbs of sydney. A few people i know had no problems and prices have not really changed over the year or 2. Decent amount of listings as well. These are people with good jobs looking for modest apartments. Sure if your on a low wage looking for a 4 bed house around byron its going to be tough but I would say thats being unrealistic. I also feel like we are also not getting a balanced report on this as its starting to turn into an election topic

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