New data exposes the cause behind Australia’s rental price explosion

New research reveals the extent of the rental crisis delivering another blow to Aussie households.

Rental prices have dramatically risen across the country due to record low vacancy rates, creating a crisis set to put even more pressure on Aussie bank accounts.

Capital city rents have risen 11.8 per cent over the past 12 months, with a 2.2 per cent rise over the last month, according to SQM Research.

House rents rose the most over the 12-month period, with a 14.7 per cent increase. Unit prices also rose by 11.2 per cent.

Managing director of SQM Research Louis Christopher said that the rental crisis has deepened, with vacancy rates across the country falling to just 1 per cent.

“Some of our capital cities and regions are recording asking rental increases in excess of 15 per cent,” he said.

“The recent monthly data suggests we are still not at the worst point in the crisis.”

Rental prices have dramatically risen across the country due to record low vacancy rates

Weekly rent across Australian capital cities. Source: SQM Research

With many people returning to the city after two years of the Covid pandemic, inner city rents also made a big jump. The cost of rental units in Sydney’s CBD jumped 5.5 per cent while those in Melbourne’s CBD lifted 7.4 per cent over the past month.

Vacancy rates across the country fell to 1 per cent in March 2022, down from 1.2 per cent in February. This is half the total number of vacancies reported 12 months ago, a number that hasn’t been seen since 2006.

According to SQM Research, the total number of residential rental vacancies currently across the country sits at 36,868, down from 43,844 in February. In some places such as the NSW coastal town of Mount Pleasant and the Victorian town Seacombe, vacancy rates have fallen to zero per cent, meaning there is nothing available to rent.

Vacancy rates for March 2022 across Australian capital cities. Source: SQM Research

“We were thinking at least regional Australia may have started to have some relief as people return back to the cities,” said Mr Christopher.

“But that has not happened yet.”

This is the latest blow to Australians who have been plagued with the rising price of basic necessities such as petrol and food.

Reports of hundreds of renters turning up to housing inspections and overvalued properties have been mounting. The landlord of a Sydney property asking for $940-a-week rent raised eyebrows earlier this year as the home’s only bathroom was outside the house.

Mr Christopher predicts that with the worst price rises yet to come, the rate of homelessness will likely increase.

Rising rental prices and limited availiablity will likely be issues that dominate the Federal election this year. Polling provided to news.com.au from Roy Morgan shows that the rising cost of living is one of the key voter issues.

“There is a dearth of specific policy in addressing the issues surrounding housing affordability,” said Mr Christopher.

“Clearly we are not going to solve this problem overnight, but I do hope the various state and territory governments will ramp up their rental assistance packages in order to cushion the rental accommodation emergency we have here and now.”