Australian renters have at least six rental applications in at any one time and are forced to compromise on property features in order to secure a new place to live, new analysis shows.
According to State of the Market: Australian Rental Properties 2023, a new housing investment report from the Real Estate Institute of Australia (REIA) and REA Group, rental conditions are the tightest on record.
The report, backed by PropTrack data, revealed the rental market was facing “record pressure”, including a need for renters to apply for multiple properties at the same time in order to have the best chance of securing a new home.
REIA President Hayden Groves said the market had reached crisis level.
“Vacancy rates nationally sit just below 1.5 per cent, with advertised rents increasing 6 per cent for houses and 9 per cent for units over the past year,” he said.
“Renters in Australia now make up around 30 per cent of households and housing stock.
“They face a competitive market, applying on average for six rentals before securing a new rental home.
“Seventy-five per cent of successful applicants feel they have had to compromise on features in their rental.”
Mr Groves said the tight conditions had been driven by a change in household formation, an undersupply of quality rental stock, severe constraints on Australia’s home building industry and post-Covid immigration resuming in force.
“There are many factors driving this ‘perfect storm’ but often the key relationships within a rental transaction are completely overlooked in the broader mega and macro debate: that of renters, property investors and property managers,” he said.
The report also revealed a picture of the typical landlord or investor that supplied the national rental market, with 70 per cent of investors owning just one property, while just under 20 per cent own two properties.
The typical investor also holds a mortgage and comes from a working household.
“Investors are generally aged 35-65 years old, with more 35-44 year olds owning investment properties than 65-74-year-olds,” Mr Groves said.
“Less than 10 per cent of all property investors own three or more properties.”
REA Group Chief Customer Officer, Kul Singh said there was a raft of ongoing challenges facing renters.
“We need supply to meet the growing demand, which is being further exacerbated by surging migration,” he said.
“The fastest way to increase supply would be to mobilise ‘mum and dad’ investors who have demonstrated their willingness to provide rental stock to the one-in-three Australians that rent.”
Mr Singh said investors needed to be incentivised, rather than penalised, to build a confident, stable property investment market.
“We also need to address the current challenges in attracting and retaining property managers that are critical to managing the growing rental sector.
“Challenges present opportunities to think differently and create meaningful change. We continue to engage our customers, government and industry groups to find new approaches to realise the immense possibilities ahead of us all and reimagine what’s possible.”