Adelaide now more expensive than Melbourne for rentals as National Rental Affordability Scheme winds up

Adelaide is no longer the country’s most affordable city to rent in according to a new report. It comes as a looming change could soon stretch tenants’ budgets even thinner.

Melbourne has overtaken Adelaide as the country’s most affordable city to rent as South Australia’s housing crisis continues to worsen.

And there’s no easing of the crisis in sight, as thousands of homes are removed from a federal government program providing subsidised rent.

In CoreLogic’s quarterly rental review from April to June 2022, a median property rent for Melbourne was $480 a week, compared to $492 a week in Adelaide.

Adelaide recorded the nation’s tightest rental markets across all property types, with only 0.3 per cent of its houses and units vacant last month.

Shelter SA executive director Alice Clark. Picture: Tricia Watkinson

The city also recorded the country’s strongest rental costs, with unit rents rising 3.9 per cent over the three months to June and up 4.4 per cent for house rents over the same period.

CoreLogic’s research director Tim Lawless said as overseas migration increased, it was likely rental demand would continue to increase.

“Despite growing affordability concerns, rental markets are expected to remain tight for some time yet, partly due to a shortage of supply,” Mr Lawless said.

“Worsening affordability could have a negative impact on rental demand as more people try to minimise costs by maximising occupancy rates or reforming larger households.”

The new figures come as the National Rental Affordability Scheme (NRAS) progressively is being wound up after enabling landlords to charge 20 per cent below market value for affordable housing for up to 10 years.

More than 1100 houses, apartments, units and townhouses in SA have been removed from the federally-funded scheme over the past four years, leaving landlords free to charge market rates or sell their properties.

Another 2513 properties will be cut by 2026 – comprising of 386 this year, 806 in 2023, 1079 in 2024, 240 in 2025 and two in 2026.

While 664 are owned by charities and not-for-profit social housing providers, 1849 belong to private individuals, investors or companies.

This was adding further pressure on a housing market already unable to meet demand for rental properties, especially for low to medium income earners.

Shelter SA executive director Dr Alice Clark said rents cannot be increased while properties remained on the NRAS, providing tenants with financial security.

However, fixed-term leases legally did not have to be renewed when the properties were removed from the scheme, resulting in rents “being put up to any amount”.

“Increases will include the missing 20 per cent and possibly an additional amount, given rents have increased so much,” she said.

Originally published as Adelaide now more expensive than Melbourne for rentals as National Rental Affordability Scheme winds up