Landlords Take Advantage – Tenants Point Out Difficulties In The Future

Tenants face difficult conditions over the next 12 months due to housing pressure, which is expected to spread as the number of rental properties plummets to a current record low, new figures show.

According to the latest Rental Vacancy Market report in July, the rental vacancy rate nationwide is at its lowest level on record, decreasing for five consecutive months to 0.9%.

Rents in Sydney almost halved to a record low of 1.3% in July, down from 2.4% in July 2021.

Melbourne’s vacancy rate has more than halved over the past year, falling to 1.4 per cent – its lowest since March 2019.

Vacancy rates more than halved in capital cities in July – while Brisbane, Hobart and Canberra remained stable. Darwin was the only city to buck the trend, increasing 0.1% to 0.6%.

The rental markets in Perth and Adelaide continue to tighten and remain the most competitive cities for renters, falling over the month to record lows of 0.5% and 0.2% respectively.

Experts say the tightening rental market is driven by domestic demand, including interstate migration, increased household formation and bidding by potential buyers, since the pandemic began in 2020.

Housing pressure is expected to be widespread in capital cities, experts say, as these difficult conditions will have the biggest impact on renters’ wallets as housing costs make up the largest proportion of household budgets. Rent increases of up to AUD 600 a month, in some cases compounding rising living costs and rising grocery, petrol and electricity bills.

Market research economic director Dr Nicola Powell said the figures showed extremely strict rental conditions for tenants.

“Nationwide, vacant rental listings are down 45% from last year and have fallen in most central cities,” Powell said.

“The rental market remains in favor of landlords in every midtown city, with a shortage of rental supply driving rents up and competition among tenants escalating. With vacancy rates falling to record lows, that won’t be fixed overnight.”

Dr. Angela Jackson said the two largest metros have begun to tighten like other rental markets across the country since the pandemic hit.

“In essence, we’re seeing Sydney and Melbourne catch up with the rest of the country. They’ve been in lockdown, leading to higher vacancy rates,” Jackson said.

“It is becoming increasingly difficult to find rental housing in major central cities. This will inevitably lead to higher rents in those markets. Housing is the heaviest part of household spending and an expense we cannot avoid, it is the first to pay.”

She said when rents increase, this has a significant impact on households.

“Certainly for low-income renters, they will face more severe housing pressures,” she said.

“Even for middle-income households, that pressure is likely to spread to central cities like Sydney and Melbourne over the next 12 months.”

She said rental demand is driven by city-based renters moving into regional markets, as well as locked-down workers moving to a new rental as a single or smaller household, rather than immigration, which has yet to return to pre-pandemic levels.

“Renting has become extremely difficult for renters, amid reports of rent increases of AUD600 a month in some cases. We’re definitely seeing that increase because our membership is feeling the squeeze,” Tsolidis Noyce said.

“We firmly oppose interest rate increases that should be passed on to renters who are on lower incomes and are less financially stable and have fewer assets. If you don’t own property, you shouldn’t be paying more on someone’s mortgage for less benefit.”

Barry Plant’s head of property management Emma Gordon said it was a fast-paced market in Melbourne, and rental apartments in the city remained vacant longer than properties outside the CBD.

“The city hasn’t fully recovered and isn’t experiencing lines at empty homes and high demand, where you’re getting six or eight applications for properties,” Gordon said.

“But in other parts of Melbourne, the outer areas, competition is high, supply is low and as soon as there is stock on the market, it will be rented immediately,” she said, adding that rents have increased across the board.

Ray White property management managing director Emily Sim said rents in Sydney were increasing by an average of A$80 to A$100 a week.