Australia records biggest rise in housing rents in more than 22 years as wages barely budge

Australia’s booming property market is bad news for renters, with prices surging across the nation over the past year, but one big city got cheaper.

The cost of renting a home in Australia surged over the past 12 months despite Covid-19 price hike moratoriums, creating an “unsustainable” situation while incomes languish.

Nationally, rental rates jumped 6.6 per cent over the year to June – the highest annual growth since January 2009, CoreLogic data shows.

As seen in the housing sales market, the regions have outperformed cities, with annual rental growth climbing 11.3 per cent – the highest annual growth on record since CoreLogic began its rental index in 2005.

For the combined capital cities, the rise was five per cent.

The group’s head of research for Australia, Eliza Owen, said the rental price hike was caused by many of the same factors that had led to the current housing price upswing, including a lack of supply in some markets.

Among the capital cities, rents rocketed the most in largely Covid-free Darwin, up a whopping 21.8 per cent over the past 12 months, followed by isolated Perth with a 16.7 per cent jump.

Rents in Sydney rose just 3.2 per cent while lockdown-hit Melbourne was the only city to go backwards, down 1.4 per cent.

Rental markets have been so competitive, hundreds of prospective tenants have turned up for viewings in some markets such as Perth. Picture: Joel Carrett / NCA NewsWire

Ms Owen said pockets of the rental market remained subdued because of the unique impacts of Covid-19 on different parts of the country.

“In Sydney and Melbourne, unit rents continue to show year-on-year decline, at 1.1 per cent and 6.4 per cent respectively,” she said.

Demand for rentals in these cities, which have historically had the highest intake of international migrants, have been hit by international border closures.

But Sydney unit rents had begun to creep higher, while Melbourne unit rents had also started to show signs of stabilising, Ms Owen said.

“Recent lockdown conditions across Sydney may impact rental markets where there are high concentrations of renters in affected industries, such as hospitality and tourism,” she said.

“These regions include the inner city market of Sydney, which has been one of the more subdued Sydney rental markets through the pandemic.”

Canberra remains the most expensive capital city in which to rent, with a house typically costing $668 per week and $521 per week for a unit.

The Chaplain family can't find a house big enough to rent and have to move as landlords are selling. Picture: Glenn Hampson

“Very high rental growth is unsustainable while income growth remains subdued,” Ms Owen said.

“The result will likely be more subdued growth rates in the coming quarters, especially as investor participation trends higher, delivering more rental supply.”

Kate Colvin from affordable housing advocacy group Everybody’s Home said the rent increases were a troubling sign for Australians living in housing stress or suffering homelessness.

“While rents have increased across the board, wages and welfare payments have not kept up, putting even more pressure on Australians already struggling to access stable housing,” Ms Colvin said.

The wage price index showed a 1.5 per cent increase for the March quarter, while the Jobseeker payment was increased by just $25 a week in February, she noted.

After rent increase moratoriums ended, some landlords jacked up prices significantly. Picture: Mick Tsikas / AAP

“Rising rents combined with stagnant wages and welfare payments has created a precarious situation for many thousands of Australians,” Ms Colvin said.

“Unless the federal government takes action and builds social housing, more people will be plunged into housing stress and homelessness.

“That will not only deepen inequality but will also deny Australia of the contribution they would otherwise be able to make.

“Without access to safe, secure housing, people cannot lead fulfilling lives of any kind.”

AUSTRALIAN CAPITAL CITY MEDIAN RENTS:

Canberra: $620

Sydney: $582

Darwin: $548

Hobart: $499

Brisbane: $476

Perth: $472

Melbourne: $444

Adelaide: $430

Except for the Northern Territory, all Australian states and territories had rent hike moratoriums in place last year, and while some were extended, they have all now ended.

Some landlords wasted no time in making up lost ground, slapping big increases on their tenants.

CoreLogic analysis released last week suggested servicing a mortgage was now cheaper than paying rent on 36.3 per cent of Australian properties, which was higher than the pre-pandemic proportion of 33.9 per cent in February last year.