An expert has raised concerns about the ongoing undersupply of rental properties as rents soar across Australia, especially in capital cities where prices have spiked by 10.3% compared to a year ago.
Data released by Proptrack indicates that Sydney retains its position as the most expensive city to rent a home, with median rents increasing by 2.8% in the last three months to reach $740 per week.
The rental market in Perth has experienced the most robust growth due to a scarcity of supply, witnessing a surge of 18.2% over the past year, with median house rents hitting $660. Following Perth, Adelaide saw an 11.8% rise to $600, and Melbourne recorded a 10.6% increase reaching $580.
Queensland reported the most significant growth in advertised rents and holds the marker for the most expensive regional rental market, with a median weekly rent of $620.
The demand for rental properties has led to a surge in apartment rents during the June quarter, resulting in a narrower price gap between renting a house and a unit. Notably, unit rents have outpaced houses both quarterly and annually, with houses commanding just a $30 premium in capital cities.
PropTrack’s senior economist, Anne Flaherty, highlighted that the escalating demand for rentals has been concentrated in and around capital city areas and close to CBDs, where the availability of units surpasses that of houses. The increased rental demand in inner-city regions is attributed to overseas migration, with newcomers to Australia seeking accommodation nearer to CBDs, workplaces, or universities.
Flaherty mentioned that every state in Australia is grappling with a shortage of completed new homes to cater to the growing population. She anticipates that it will take years for Australia’s housing supply to align with the demand, as new dwelling approvals are currently at a ten-year low, with a notable slowdown in new construction commencements.
The Real Estate Institute of Australia’s vice president, Hannah Gill, expressed concerns about the lack of affordable housing stock in the market. Gill predicted a shortfall of approximately 37,000 dwellings in the upcoming financial year, projecting that this deficit could widen to around 39,000 dwellings over six years due to historical low new dwelling commencements.
Property investment expert Bushy Martin underscored that the rental market crisis is more pronounced in the affordable price brackets than the median rental prices suggest. Martin observed a softening rental market across various states, particularly in properties priced at $500 or below per week, where severe shortages are prevalent.
Martin noted that four-bedroom properties, especially those priced below $500 per week, are facing immense pressure, leading to extended vacancy periods. While market dynamics may eventually drive rental prices downward, conflicting cycles in inflation and wage growth are currently impeding this adjustment.
Despite the challenges, Martin remains optimistic about a future correction in rental prices, acknowledging the existing difficulties posed by economic disparities and market fluctuations.
Priyam Gera