Rental crisis engulfs Australia

Last week I argued that Australia’s rental market was “hurtling toward disaster” given the nation had just recorded the fastest rental growth on record:

Fastest rental growth on record.

Total rental listings have shrunk by around 40% over the pandemic across the combined capital cities, with vacancy rates also at record lows:

Rental supply has collapsed.

Against this backdrop, the Albanese Government has committed to throw open the temporary and permanent migration floodgates, which will likely lead to record immigration flows over the next few years.

Accordingly, I concluded that “Australians are facing a further shrinkage in rental vacancies, soaring rents, and rising homelessness”, which is “an inequality disaster in the making”.

Since that article, a number of reports have emerged highlighting the extent of the rental disaster taking place across Australia.

The Saturday Paper reported on “Australia’s spiraling homelessness crisis”, noting that “nationally, the waiting list for public housing jumped by more than 20,000 people to 163,500 in the five years to 2021, while those in greatest need – a significant chunk of that list – almost doubled from 38,000 to 67,600”.

Housing data from advocacy group Everybody’s Home revealed that renters across Sydney are facing dramatic rent hikes, which is impacting the city’s poorest residents the most. Vacancy rates have declined, and rental prices skyrocketed across Sydney, fueling a cost-of-living crisis:

“The rental crisis is sending shockwaves through the community, with renters hit with massive rent hikes having to cut back on food, petrol and other essentials,” [Everybody’s Home spokeswoman Kate Colvin said].

“This is a social calamity and an economic disaster, with the double whammy of record low vacancies and skyrocketing rents making it impossible to find an alternative, more affordable home.”

The data shows that lower-income renters in Sydney’s western suburbs are suffering the most, with 76.5% of renters in Campbelltown saying they are suffering financial difficulties with their rent.

Separate data from CoreLogic, published by The ABC, also showed that rents have soared by 10% or more in some parts of Western Sydney, including Parramatta and Blacktown:

Billie Sankovic, CEO of the Western Sydney Community Forum, told the ABC that “the current supply of social and affordable housing [in Western Sydney] meets around four per cent of demand. So we know that we need about 6,500 new social and affordable dwellings per year, well into the 2030s, in order for us to meet demand.”

The situation is similar in Brisbane, with CoreLogic releasing a report showing the proportion of income required to service new rents across Brisbane has soared to 29.3%, following a 13.3% increase in rents over the past year:

The upward pressure on rents is set to continue, given the vacancy rate across Greater Brisbane has plunged to just 1.0% – way under the five-year average of 2.8%:

It is the same story in Perth, where vacancy rates have collapsed and rents are soaring. There are only 1905 rental properties advertised in Perth — the lowest number in more than a decade:

Real Estate Institute of WA president Damian Collins believes the rental shortage will worsen on the back of rising immigration:

“It has got worse and will likely continue to get worse because most of the people coming into WA through the migration programs will rent in the first instance”.

“If we get another 30,000 migrants coming through over the next year, most of them are going to want to rent first”.

“The real problem is the building industry just doesn’t have the capability to build the houses as quickly as we need them”.

Where will the hundreds of thousands of new migrants live when there is already a chronic shortage of rental accommodation across the nation?

As I said last week, the Albanese Government’s ‘Big Australia’ immigration push is an inequality disaster in the making.

The only outcome is an even tighter rental market, soaring rents, and increased homelessness.