Yahoo Finance Rental supply hits historic low - but there’s some good news for tenants
Renters will continue to face tough conditions this year, but the rate of price rises is expected to ease.
Renters are facing a tougher market as the number of properties available dwindle, pushing rents up $60 per week across the country.
Total rental listings on realestate.com.au hit a record low in December, PropTrack’s Rental Report found, sitting at 30.2 per cent below the decade average for the month.
Strong demand for the limited rental stock available has seen prices skyrocket, with median rents up 11.5 per cent over the year, to $580 per week.
Are you a tenant dealing with rent increases? Contact tamika.seeto@yahooinc.com
PropTrack director of economic research and report author Cameron Kusher expects rents will continue to increase this year, but their intensity will slow.
“While we expect rents to continue to rise this year, it’s likely that the rate of growth will slow,” Kusher said. “The already-higher cost of renting and overall increase in the cost of living will limit rent price increases moving forward.”
Across the capital cities, annual rental growth slowed from 17.8 per cent in 2022 to 13.2 per cent in 2023. In regional markets, it eased from 11.6 per cent to 4.2 per cent.
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While there’s been a rebound in new landlords entering the market, Kusher said this was still not enough to “sufficiently improve stock levels” as existing investors exited the market.
“There is a critical need for additional housing, particularly in the major capital cities,” he said. “Serious consideration needs to be given to the financing of these projects and the capacity to build the volume of housing we need.”
Rental properties are also being snapped up quicker. Rental listings are spending an average of 19 days on realestate.com.au, which is a historically low level. There are 23.8 enquiries per rental listing, on average.
High rents make it harder to save deposit
Higher rents are also making it harder for renters hoping to escape the market.
“For renters hoping to purchase a property, higher rents are making it difficult to save a deposit,
while higher interest rates will make servicing a mortgage more expensive,” Kusher said.
For some renters, though, the increased prices are actually motivating them to get onto the property ladder sooner than they had initially planned.
Yahoo Finance spoke to one 25-year-old from Perth, for instance, who was kicked out of her rental but managed to buy her first home with just a $10,000 deposit.
Brooke was able to buy the two-bedroom apartment by taking advantage of the WA government’s $10,000 first home owner grant and Keystart initiative, which allows buyers to purchase a property with a 2 per cent deposit.
Domain chief of research Nicola Powell said she expected more tenants would try to escape the property market this year and would start to make compromises on things like location or number of bedrooms to achieve that.
“A lot of renters have just gone, ‘Well, we need to break into the housing market or we're never going to catch up’ and that’s the mentality many people now have,” Powell told Yahoo Finance.
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