Data from CoreLogic shows that housing rents rose 8.5% nationwide in February, to a record high of $614 per week.
Source: CoreLogic
Separate data released this week by Domain showed that Australia’s rental vacancy rate collapsed to a record low 0.7% in February 2024:
Source: Domain
Suburbtrends director Kent Lardner notes that people in the lowest socio-economic households are not only facing rising housing costs but also growing competition from wealthier Australians for the limited supply of housing stock. And this is increasingly forcing them to relocate to more affordable suburbs.
Lardner’s analysis shows that more than 800,000 households that rent their home could potentially be displaced from their current suburbs due to this trend.
“The mounting pressure from the relentless increases in rents are prompting wealthier households to seek out cheaper rental homes, crowding out those in the lower socio-economic ladder”, Lardner said.
“The intense competition for a limited pool of rental properties and a dire shortage of affordable housing options mean this problem will ripple out to the poorest suburbs, leaving those in the lowest socio-economic households under the most strain over the medium to long term”.
“The effect of having a bigger population who are renting for at least some time has added some extra pressure to rental affordability”, said Emma Baker, professor of Housing Research at the University of Adelaide and co-author of the report.
“This means the lower end of the rental sector are suffering quite a lot, so the pressure is being pushed down”.
The forces mentioned above are inevitable when the federal government has chosen to grow the population so aggressively when the supply-side is constrained by high interest rates, high materials costs, and labour shortages.
Australia’s population grew by a record 626,000 people last financial year off record net overseas migration of 518,000.
At the same time, Australia built only 170,000 homes, or 162,000 when adjusted for demolitions.
Forward-looking indicators for housing construction, such as dwelling approvals, have collapsed to their lowest level in more than a decade, which points to even lower construction ahead.
Therefore, with population growth projected to remain turbo-charged on the back of historically high immigration, Australia’s rental shortage will inevitably worsen.
The end result will be more low-income households being forced to live in group housing or being forced into homelessness.
