Yahoo Finance Rental affordability a ‘growing concern’ as prices skyrocket
It has never cost more to rent in Australia, with the average house rental price hitting a record high.
Domain’s quarterly Rent Report found that house and unit rents had risen across all capital cities - recouping all losses made as a result of COVID-19.
According to the report, house rents have hit record-highs in major cities like Sydney, Melbourne and Brisbane.
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To rent a house in Brisbane, it will cost an average of $480 per week overtaking Melbourne at $445 per week.
Renting a house in Sydney will cost, on average, $600 per week.
The report warns that once international borders reopen, rental demand will spiral in major cities, particularly in Melbourne and Sydney, which has historically welcomed more overseas migrants.
“House rents are racing past unit rent growth, as 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,” Nicola Powell, Domain’s chief of economics and research, 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.”
The rise in rent prices has led to more Aussies opting out of house-share situations, the report found, to seek smaller inner-city apartments instead.
“Rental affordability is a growing concern, particularly for lower-income households,” Powell said.
“The associated price constraint of a house will have driven a compromise from some tenants to a more affordable unit.”
Powell warned that once borders opened more and those who ditched the city returned, the rental market would feel the squeeze.
“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.”
Where is it the hardest to rent?
Renters in Adelaide and Hobart were in a fierce landlord’s market where it was “nearly impossible” to find a vacant rental, the report said.
Both the cities’ vacancy rates in December were low, with Adelaide’s at 0.4 per cent and Hobart’s at 0.3 per cent.
In order of vacancy rates, here is how the capital cities stack up:
Melbourne - 3.2 per cent vacancy
Sydney - 2.6 per cent vacancy
Brisbane - 1.3 per cent vacancy
Darwin - 1.3 per cent vacancy
Canberra - 1 per cent vacancy
Perth 0.6 per cent vacancy
Adelaide - 0.4 per cent vacancy
Hobart - 0.3 per cent vacancy
“Rental supply remains short in many areas, providing little choice and strong grounds for further rental price hikes,” Powell said.
“Investors are returning to the rental property market to take advantage of these trends - this should help to slow down rent growth.”
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