New data shows Australia’s rental crisis nightmare to get worse

As people across the country struggle with the current rental crisis, renters in two Aussie cities have been singled out for some very bad news.

While house prices might be falling across the country, the cost of renting certainly isn’t, with new data showing two Aussie cities in particular are facing rapidly rising housing costs.

Renters in almost every part of the country have been feeling the sting of increasing prices since the start of the pandemic, with the situation growing even more dire over the last few months.

Now, PropTrack’s Rental Report for the June 2022 quarter, has found the rental market will likely continue to heat up, with Sydney and Melbourne to face the brunt of the crisis.

The report found a limited supply in rental properties is driving the competition, with the number of new listing in June 2022 13.8 per cent lower than the decade average.

The number of renters per rental property listed on realestate.com.au has risen 28 per cent year-on-year across capital cities, with Sydney and Melbourne experiencing the greatest increase.

Capital cities, particularly Sydney and Melbourne, are expected to continue to experienced rising rent prices. Picture: PropTrack Rental Report June 2022 Quarter

This graph shows a decline in the monthly total rental listings. Picture: PropTrack Rental Report June 2022 Quarter

PropTrack Director of Economic Research and report author, Cameron Kusher, said rising prices for rentals in major cities will continue for some time, particularly as more activity returns to these areas post-Covid.

“With overseas and interstate migration returning with borders now reopened, it seems likely that rental conditions will tighten further over the coming months,” he said.

“This is likely to be most evident in Sydney and Melbourne, where rental demand and prices dropped throughout the pandemic but are now rebounding rapidly.”

The report also found that the new financial year means higher land tax charges for investors and higher interest rates in many jurisdictions.

Many areas are experiencing an increase in the number of potential renters. Picture: PropTrack Rental Report June 2022 Quarter

As a result of this, many landlords will likely be looking to pass on these rising costs to renters where they can, resulting in even higher rents.

Rental prices in Sydney have grown by 6 per cent and 3.7 per cent over the past year.

Rental growth has also been above five per cent across every other capital city.

The median rental price for a house in Sydney is $620 a week and $500 for a unit, this is compared to $495 and $410 for rentals in regional NSW.

In Melbourne, the median weekly price for a house is $450 and $400 for a unit, compared to $420 and $330 in regional Victoria.

Nationally, the median weekly rent for a house is $490 and $440 for units.

This table shows the median rents for all dwellings, houses and units for all capital cities and regional areas. Picture: PropTrack Rental Report June 2022 Quarter

The biggest year on year increases in rents were seen in Darwin (14.6 per cent), Adelaide (10.3 per cent) and regional areas in South Australia (17 per cent) and Western Australia (12.8 per cent).

The PropTrack report found rents have been rising at the fastest pace in seven years, with median weekly rental prices rising seven per cent compared to June last year.

However, there could be some good news coming for those in regional areas, with Mr Kusher saying there are signs the crisis is easing in some areas.

“There’s already some indication that in certain regional areas, rental pressures are easing, with more stock for rent and properties taking longer to lease,” he said.

“This is logical as the impetus to shift regionally has eased as major cities have reopened. Some people that moved during the pandemic will now return to the big cities, while others deciding to stay will look to purchase their own home.”

Australia is still very much in the midst of a rental crisis. Picture: NCA NewsWire / Gaye Gerard

This will come as welcome news to thousands of Aussies, with some even left homeless as a result of the rental crisis.

But for other parts of the country, rental options are likely going to remain extremely tight into the future, with Mr Kusher saying it is “unlikely” that relief is on the way any time soon.

So, what is the solution to the crisis? More rental properties.

Unfortunately, increasing the number of available rentals is more easy said than done.

“Increased investor purchasing is addressing this, but it will take some time to ease the existing pressure,” he said.

“Federal and state governments continue to offer incentives to first-home buyers. With property prices falling and rents rising, this may encourage some to move from renting to ownership.

“Over time this may ease some of the rental supply pressures, but it is likely to mostly be offset by the return of arrivals from overseas, most of whom seek rental accommodation on arrival.”