Earlier this week, Domain released data showing that Australia’s rental vacancy rate fell to a record 0.7% in February, with all major markets and the combined regions at or near record low vacancy:
Source: Domain
Now PropTrack has released its Rental Affordability Report, which shows that “Australia’s rental affordability is at its worst level on record”.
PropTrack found that “households earning the median income of roughly $111,000 can afford to rent the smallest share of properties since 2008 when records began, driven by surging rents in recent years”.
“After rental affordability hit a low point in 2009-10, owing to slow income growth after the Global Financial Crisis, rental affordability gradually improved as rents increased at a slower pace than incomes”, the report reads.
“From financial year 2018-19 to today, national median household income has increased 19%. Since the pandemic, median rental prices grew 38% across the country”.
“Affordability reached a high point nationally in 2020-21. This followed the initial stages of the pandemic which slowed average rent growth further, and in many parts of the country, such as inner Sydney and Melbourne, rents decreased significantly”.
“Surging rents over the past few years mean renters across Australia are now facing the worst level of rental affordability in at least 17 years”.
“The PropTrack Rental Affordability Index shows that, over the six months from July to December 2023, households across the income distribution could afford to rent the smallest share of advertised rentals since at least 2008”.
“That is a substantial change from conditions before and during the pandemic”, PropTrack says.
PropTrack also shows that only 39% of rental properties advertised on realestate.com.au from July to December 2023 were affordable across the country for a typical-income household spending 25% of their income:
“Highlighting the alarming state of rental affordability at present, a household earning the median (or typical) income in Australia of $111,000 can now afford just 39% of rentals advertised over July-December 2023”, the report says.
“This is, by a reasonable margin, the lowest share since records began in 2008”.
The situation is obviously going to worsen given the Albanese government is running a record immigration program into a supply-constrained market:
As a result, population demand will continue to run ahead of rental supply, driving vacancy rates lower and rents higher.
Lower income Australians will inevitably respond by moving into shared housing and becoming homeless.
