A chronically challenged rental market, fuelled by record low supply and soaring weekly rents, is creating a self-perpetuating housing crisis where would-be first-home buyers are finding it increasingly difficult to stop renting and buy a home.
That’s because they’re struggling to save for a deposit due to extra money being funnelled into paying rent.
According to the PropTrack Rental Report September 2023, the national median weekly advertised rent on realestate.com.au at the end of the September quarter was $550 per week, up 3.8 per cent over the quarter and 14.6 per cent over the year.
The 3.8 per cent increase in rents over the quarter was on par with the 3.9 per cent climb in the June 2023 quarter, but higher than the 3.2 per cent rise in the September quarter last year.
The high weekly rents are being fuelled by low listings.
The report showed new rental listings dropped 5.7 per cent annually in September, which is the fewest new listings to enter the market in that month for more than 10 years.
With a low volume of new listings coming to market, the total number of rental listings was at a record low after falling 7.1 per cent year-on-year. •
The national vacancy rate is also at a record low of 1.1 per cent, down from 1.3 per cent a year earlier.
PropTrack Director of Economic Research and report author, Cameron Kusher, said the rental market remained “extremely challenged”, with renters facing significant competition for the limited stock.
“These conditions have pushed the cost of renting much higher over the past year,” he said.
“Nationally, investors continue to exit the market, which is keeping the overall stock of rental properties low.
“For first-home buyers, higher rents make it harder to save for a deposit, while borrowing capacities have reduced and prices continue to rise, making it difficult to enter into homeownership.”
Mr Kucher said strong migration to Australia was also having a huge impact on the rental market.
“The rapid rate of migration to Australia is also exacerbating competition for rentals, with the majority of people arriving not owning property,” he said.
“The March 2023 quarter was the strongest quarter on record for net overseas migration.
“From here, we expect rents will continue to climb in the major capital cities due to persistent low supply and strong demand.
“Outside of the major capital cities, we expect rental price growth to continue to slow, the availability of stock for rent to ease further and vacancy rates to start drifting higher.”
Enquiries per listing were also up, signalling strong competition for rentals.
The number of enquiries per listing rose from 24.5 a year ago to 24.8.
Enquiries per listing across the combined capital cities were sitting at 28.1 in September 2023, up from 26 a year prior.
The number of enquiries per listing were greatest in Perth (50.3), Adelaide (40) and Melbourne (31.4) in September 2023.
Over the same period, enquiries per listing were lowest in regional NT (8.9), regional Tasmania (9) and Canberra (9.1).
Rental properties are also being snapped up quickly.
The number of days a property was advertised for rent on realestate.com.au was 20 days.
“These conditions highlight why it is so important to build more housing, particularly in the major capital cities,” Mr Kucher said
“With dwelling approvals and commencements at decade lows and this trend unlikely to change in the near-term, immediate solutions should focus on encouraging investment and better utilisation of existing housing.
“Additionally, first-time buyers should be supported into homeownership, freeing up the rental stock they currently occupy.”