“Extreme” rental inflation squeezes life out of young Australians

CoreLogic has released its rental results for May, which showed that the rate of growth in Australian rents has slowed in recent months.

The national rental index climbed by 0.7% in May, the slowest monthly increase since December last year.

Most capitals have witnessed a decline in rental growth compared to the first quarter of the year when rental demand is typically higher.

Rental growth has slowed in most cities, particularly in the unit sector, where it has been more significant.

Rents have increased by 8.5% nationally in the past year, down from 8.9% the previous year and 9.3% two years before.

Source: CoreLogic

Despite the slowing in rental growth, CoreLogic research director Tim Lawless described the increases in rents as “extreme”:

“Although rental growth has slowed, the easing trend has been gradual. Over the five years prior to COVID the national rental index was rising at the average annual pace of just 1.3%”.

“In this context, and amid stretched rental affordability, an 8.5% annual rise in rents is extreme”.

The financial pressure caused by the surge in rents has contributed to the collapse in spending by younger Australians.

The following chart from independent economist Tarric Brooker shows that real per capita spending by younger Australians has collapsed:

Source: Tarric Brooker

The key rental demographics of 25-29 and 30-34 years old have recorded the most significant decline in spending, plunging by 7.1% and 4.2%, respectively, over the last year.

An intergenerational and inequality disaster is unfolding before our very eyes.