Australia’s rental market in dire straits as listings collapse

CoreLogic’s latest rental listings report shows that the number of homes available for rent across Australia’s capital cities has plunged by around one-third to levels not seen since 2014, when Australia’s population was around 10% smaller:

Australian rental listings

Capital city rental listings back at 2014 levels.

Accordingly, rental growth remains turbo-charged, soaring by 3.0% over the May quarter and 9.3% annually, with regional rents (10.8%) growing even stronger than the capital cities (8.8%):

Australian rental growth

Australian rental growth universally strong.

SQM Research’s latest rental report also showed that Australia’s capital rental vacancy rate fell to its lowest level in 16 years of records:

Vacancy rates time series

Lowest rental vacancy rate on record.

Meanwhile, SQM’s asking rents index index soared by 2% in May to be 15.6% higher year-on-year across the combined capital cities.

The planned return of ‘Big Australia’ mass immigration will obviously add further fuel to the rental fire.

Where will all of the new migrants live when Australia doesn’t have enough rental properties for the existing population?

Unconventional Economist

Comments

  1. TheLambKingMEMBER

    This makes no sense. No immigration, apartments are still getting build, so why has it collapsed?

    • Stock v Flow.
      The stock of all dwellings is relatively unchanged.
      The flow of available rentals has slowed to a trickle because people are staying put.
      The turnover is what creates the vacancy rate.
      /my $0.02

      • stay-puts are the reason. my gf has empty aptm 2 bedder for 16months. bris CBD.
        reason is landlords are frothing crazy nuts; and too tough to bother with new place.

    • nil_allMEMBER

      If it’s only stay puts keeping down listings then price would not be rising so fast. I hypothesise it’s a desire to pay more on housing as a result of covid with smaller house holds and greater space the priority alongside all the covid liquidity making it possible to bid up the price to get it. A further symptom of overheating economy.

    • Tassie TomMEMBER

      My take: the wealth divide has increased.

      This means that more people can afford spare bedrooms, whether that’s a bigger house, a holiday house that isn’t let, or even an AirBnB property (probably the most minor factor which is copping all the flack).

      Consider this scenario – someone in Melbourne who is already doing pretty well in 2019 suddenly finds in 2021 that:
      1) Their PPOR value has increased by about 50%
      2) They have received tens of thousands of dollars in Jobkeeper payments even though their business has increased its profits
      3) Their borrowing capacity has increased because they’ve got a bigger equity deposit (due to #1 and #2) and interest rates are lower, and
      4) Melbourne is a miserable place to be because it’s always locked down; their favourite restaurants and coffee shops have gone broke; and two AFL grand finals have been played interstate.

      They decide to buy a holiday house somewhere that’s not Melbourne, whether it’s a sea-change or a tree-change.

      Suddenly there is one house which is suddenly not available for either PPOR or for rent. 2, 3, or 4 bedrooms have been taken out of circulation. 2, 3, or 4 people (or couples or kids that share a bedroom) have been made homeless.

      • Another reason for interest rates to increase then, that extra room or property come on to the market. One way or another.

        • Tassie TomMEMBER

          Yes and no. As long as the wealth divide remains, the wealthier will still be able to afford more spare bedrooms whereas the less wealthy will not be able to afford anything.

          Unless there is a housing surplus (hence a vacancy rate of 4%+) rents are determined by 1) capacity to pay, and 2) barrier to home ownership. If higher interest rates decrease house prices (hence home loan required) but increase the interest rate on the (now lesser) home loan then the barrier to entry will remain the same, hence there will be no downward pressure on rents.

          IMHO tax policy is the biggest driver of wealth inequality. Labour income (actually getting an education and working in a job for money) is taxed more heavily than just about every other form of income (capital gains realised or unrealised, share dividends/ buyback schemes, superannuation earnings). These other form of income are not available to people who don’t have wealth to start with.

          So if wealth growth is relatively untaxed and labour income is the most heavily taxed form of income that there is, then of course those who start wealthy are going to get wealthier and those who are working to try to begin accumulating wealth are going to go nowhere. Hence the housing and rental crises that we have on our hands now.

  2. A bit of tax reform would help – start with Air B&B/ Stayz etc and holiday homes.

  3. reusachtigeMEMBER

    If you can’t afford to rent in a particular area you need to move to a poorer area more suited to your class even if that means going to Bangladesh to be with other severe povvoes.

    • rob barrattMEMBER

      Absolument!
      When I swan into my Vaucluse abode after the daily Cappuccino Club exclusive, I take in the sea view on the high balcony. I feel very comfortable about things, because, deep down, I know I’m worth it.

      The last thing one wants is for the beau monde to be tarnished by the squalid activities of large numbers of itinerant peasants.

  4. Isn’t it interesting that our betters are creating special grants to enable Nurses, Teachers and Police officers to buy over priced houses. Surely all of these groups would be better served by strengthening Tenancy laws.
    Imagine a tenant with 10 years residence required a minimum of 1 years notice. This simple change would go a long way towards eliminating the true blue Aussie practice of dumping the tenants so you can sell the house.
    Every time the magical RE engine loses its head of steam we see the Flippers dump tenants and get the house ready for a quick sale. These tenants are nurses, teachers, police and generally valued members of our work force.
    Lets pass simple laws which protect all rather than silly laws that only serve to pump up RE prices.
    But maybe I’m missing the whole point of the exercise.

    • In the old days many schools had a house on the grounds where a teacher lived with their family (eg Head Master)
      In the old days hospitals had nurses quarters where single nurses could live.
      In the old days some police stations and fire stations also had accommodation on-site.

      Would an on-site teacher help deter vandalism of schools?

      Would it be safer for a single nurse to get home after a late shift?

      Would it ever be useful to have off-duty firemen nearby the fire station?

      @#$% this country has gone backwards in many ways.

    • I feel like we came up with a good definition of essential workers during the fire, the plague and the floods.
      Why not take all that definition and provide rent subsidised accommodation to these industries via tax to the non essential workers. We called them essential didn’t we? Don’t we need them to stay put than other way around?

      • I have no problem recognizing the “essential” role which ahm essential workers play, my olny point is that we wouldn’t have any need create special categories of favored renters (allowed into government subsidized housing) if we simply fixed the laws governing Tenancy, making them socially fair.
        In most other countries a large portion of the available Rental accommodation is owned by large intuitions like Insurance companies (in Germany) and Real estate Investment Trusts (in USA). These big companies buy and sell large blocks of apartments (or houses) to other intuitional investors. In general the house is worth more to them rented (with a stable paying tenant) than vacant, unfortunately in Australia a large portion of the available rental accommodation is privately owned and is sold onto private investors or families looking for a home. Both categories prefer to buy the house taking “vacant possession” so the old landlord boots even the best tenant to the sidewalk once the thought of selling enters their head.
        We need stronger tenancy laws laws to specifically address this all too common practice, oh and btw this happens when house prices are in decline so the Tenant, even if they have the money to buy, is somewhat forced to buy at or near the peak just to keep a roof over their family’s heads.

  5. Finance MessiahMEMBER

    I have some land. I’ve been joking with my wife that maybe we should buy some shipping container homes and rent them out. Why haven’t state governments and others thought of doing this?

    • That ain’t workin’, that’s the way you do it
      Money for nothin’ and your chicks for free

    • It has been thought of and has been made illegal.
      The elite like the high rents they are collecting.