INDUSTRY NEWSNationalReal Estate News

Rental home cull as rents rise at their steepest annual rate on record

Australia’s rental crisis isn’t looking like it will ease anytime soon with more than 6000 affordable rentals set to exit a national scheme this year, while the latest Domain Rent Report shows Australia recorded its steepest annual rental increase on record in 2022.

Across the combined capitals house rents soared 14.6 per cent while units climbed 17.6 per cent, with rents at record highs across all cities, apart from Darwin, and in Perth for units.

Domain Chief of Research and Economics Dr Nicola Powell said the rental market had become extraordinarily tight due to increased tourism and overseas migration.

Foreign students were also placing greater pressure on supply, which fuels the landlord’s market and puts increased pressure on tenants across much of the country.

“Nationally, asking rents are at historic highs across all cities (apart from Darwin and units in Perth), rents are rising at the fastest annual pace ever seen across the combined capitals and the number of vacant rental properties is at an all-time low for the month of December,” Dr Powell said.

This is the longest stretch of continuous rental price growth as house rents rise for the seventh consecutive quarter and unit rents for the sixth.

In the December quarter house rents rose 6 per cent in Perth to $530 per week, followed by Melbourne (up 2.1 per cent to $480), Adelaide (up 2 per cent to $500), Hobart (up 1.9 per cent to $550), Canberra (up 1.5 per cent to $690) and Darwin (up 1.2 per cent to $620).

Rent rates did not change in Sydney ($650 per week) or Brisbane ($550 per week).

Across the combined regionals rent rates jumped 2 per cent in the December quarter and climbed 11.1 per cent year-on-year to $500 per week.

Dr Powell said last year’s competitive rental market was continuing in January, which is often the busiest period in the rental calendar.

“Due to a seasonal lift, those on the hunt for a new lease this quarter will find slightly more choice as the rental market moves into its busy changeover period at the start of the new year freeing up some homes for a short amount of time,” she said.

“Amid Australia’s cost of living crisis, we predict that units will be a popular option for those looking for a rental this year. 

“Unit rents have been growing faster quarterly than houses in most capital cities, likely because affordability concerns continue to persist.”

Units in Bass Hill in Sydney’s South-West have seen a 44.2 per cent annual rise in weekly asking rents. Likewise, units in Melbourne’s CBD have also jumped 33.3 per cent over the past year. 

“This suggests that budget-conscious tenants are making the shift from houses to units to suit their current budgets while still being close to work, school and amenities.”

Sydney is now the most expensive city to rent a unit, hitting a new high of $575 per week in the December quarter, while the pace of annual growth in the house market paused for the first time in 18 months.

Melbourne remains the most affordable city to rent a house in despite its longest stretch of rental price growth in 15 years continuing with the fifth consecutive quarter of rising rents. 

Units also hit a record $450 per week.

Brisbane’s house rents remained at a high of $550 per week while units rose for the sixth consecutive quarter.

House rents hit a new high in Adelaide but growth is slowing, while Perth’s house rent jumped for the fifth consecutive quarter and Darwin’s house rents climbed to their highest point since 2015, with units the most expensive since 2014.

Canberra’s house rents rebounded in the December quarter, reversing all of the previous quarter’s decline, while Hobart’s rental market was short-lived with house and unit rents rising to new record.

Affordable rental cull

The rental price pain comes as Everybody’s Home called for the Federal Government to build 25,000 new social homes each year to help end the crisis.

Spokeswoman for the coalition of housing, homelessness and welfare organisations, Maiy Azize said, according to the latest Federal Government figures, more than 6600 affordable homes would be lost this year as they leave the scrapped National Rental Affordability Scheme (NRAS).

But the time the scheme ends in 2026, she said 36,000 affordable rental will have been lost.

“Australia already has a social housing shortfall of 500,000 homes, and the rental market has never been tougher,” she said.

“These figures show that we’re losing even more affordable rentals at a time when Australians can least afford it.

“With thousands of affordable rentals set to disappear, we need the Federal Government to step up and take action.”

Queensland is set to lose 2499 affordable NRAS homes this year, followed by Victoria (1356), Western Australia (1110), South Australia (806) and NSW (605).

“Many Australian suburbs have hit record high rents and thousands of tenants are in rental stress. The government can start changing that from this year if it’s ambitious enough.”

What the Federal Government is doing

In the Albanese Government’s Budget last year, it announced one million new home would be built over five years from mid 2024 under the new National Housing Accord.

The government will provide $350 million to deliver 10,000 of those homes.

Other initiatives included a $10 billion Housing Australia Future Fund, which will help build 20,000 new social housing dwellings and 10,000 new, affordable homes for frontline workers.

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Kylie Dulhunty

Kylie Dulhunty is the Editor at Elite Agent.