Bad news looms for Aussie renters as prices set to explode

With available rental properties at critically low levels in some parts of Australia, more pain is set to come for those looking for a home to lease.

The days of snagging a pandemic rental bargain in some areas of Australia, including reduced prices and a week’s free rent, are over with the opening of international borders expected to see competition skyrocket for homes.

Visitors are allowed back into Australia from February 21 and the apartment market in particular is expected to pick up after taking a hit through the pandemic, as the country sees the return of international students and skilled immigrants looking for places to lease, according to property experts.

However, available rentals are already at critically low levels in some areas around Australia.

Rents have already begun to creep up across the board in the past four months, but an influx of potential renters into the market is expected to see prices explode even further.

A recent report from Domain found that capital city house rents have soared by 3.4 per cent over the past quarter hitting a new record high, while unit rents have jumped by 2.5 per cent.

On average, people are having to shell out $499-a-week around Australia to rent a house; for units, the average is $436.

Rents have already begun to climb in the last four months and more competition could make it even harder. Picture: NCA NewsWire/David Swift

House rents have hit record highs in major cities like Sydney, Melbourne and Brisbane too.

The Queensland capital has seen weekly rent for houses rise to $480 as it continues to overtake Melbourne, which has an average weekly rent of $445, the Domain report found.

It’s left many renters unhappy with research finding that 83 per cent of homeowners are currently happy with rental prices, compared to 69 per cent of renters, according to a survey by fintech company Finder.

As many as 26 per cent of renters say they are “extremely stressed” with current prices, it found.

PropTrack director of economic research Cameron Kusher said the national rental market looks set to remain tight over the coming months after already experiencing reduced supply and surging prices.

“With international borders reopening, it’s likely that the coming months will see the excess rental stock in inner city areas reduce as migrants come back and occupy those properties,” he said.

“The reopened borders could provide further challenges as the return of travellers, both domestically and internationally, sees landlords contemplate moving their rental properties from long-term leases to short-term letting.”

Apartments are set to become popular again among renters. Picture: NCA NewsWire/Gaye Gerard

Properties are also being snapped up in record time nationally, with the median days a place is advertised on realestate.com.au at a historic low of 21 days in December 2021.

First Hand Real Estate director Mitchell Farah said demand for rentals had increased “massively” since the start of the year, with Sydney’s eastern suburbs and the inner west particularly popular.

“In the last 12 months we’ve seen people relocate back to Sydney or move to Sydney for work. There’s a lot of relocating happening, whether it’s new people who are skilled in long visas or returning to the city from regional areas,” he told the Daily Mail.

“Inspection numbers are up, inquiries are up, applications are up and urgency for renters is up.”

During Covid it was a renter’s market with one-on-one inspections being the norm, he added.

“In most cases now we’re seeing three or four fantastic applications and trying to split hairs,” he said.

Mr Farah revealed one eastern suburb home had fetched rent of $1250-a-week but after the tenants moved out it was relisted at $1300, with several applications offering $1400 to secure it.

Some renters are offering more money than the asking price. Picture: iStock

He added that rental CVs are becoming a “clever way” to stand out, which could include character references, evidence of paying rent on time and potentially even an offer to pay two to three months’ rent in advance.

Overall, house rents have been racing past unit rent growth, Dr Nicola Powell, Domain’s chief of economics and research said.

“The increase in demand and competition for larger spaces has resulted in landlords hiking asking house rent prices three times faster than units over the past year,” she said.

“In some cities, units with more bedrooms also continue to have rent price growth. This reflects the desirability for space from those able to work from home, but also provides an insight into demand demographics.”

Young people may shun house sharing for cheaper apartments. Picture: NCA NewsWire/Gaye Gerard

This trend could see younger generations turn their back on share housing and instead rent in smaller inner city apartments, she added, although rental affordability is still a growing concern.

“Competition to secure a rental will escalate once borders reopen and international students, new migrants, and expats action a relocation,” she said.

“This is likely to be further strained by demand from Covid-19 escapees as some return from sea and tree change areas which may result in further increase in rental prices.”

Adelaide and Hobart’s rental markets are particularly insane, recording vacancy rates of just 0.4 per cent 0.3 per cent compared to 2.6 per cent in Sydney and 3.2 per cent in Melbourne.

Across the nation, vacancy rates are also low with Canberra sitting 1 per cent, Brisbane at 1.3 per cent, Perth at 0.6 per cent and Darwin at 1.3 per cent.

Available homes to rent were particularly bad in regional Western Australia, Melbourne and regional South Australia, all of which have recorded the largest year-on-year falls by 26 per cent, 19 per cent and 18 per cent, according to PropTrack data.

Cameron Kusher, PropTrack director. Picture: Supplied

But Mr Kusher said that property investment will lift over the coming year.

“With more investors purchasing properties, this will in turn add to the rental supply and hopefully ease some of the surging rental prices,” he said.

Yet, the explosion in demand for rentals has seen some cheeky situations popping up too.

There’s the four bedroom house in Sydney’s inner west looking for $940-a-week in rent, which seems like a steal, but there’s a catch – there’s no bathroom inside the home.

Then there’s the Aussie comedian, who had his rental application cancelled after he requested previous tenants provide a reference for the landlord.

While his reference request was surprisingly supported by the head of the nation’s real estate body, he acknowledged it was a tricky ask in a competitive market.