Australian house prices are stubbornly high, The number of affordable rentals has reached a record low, according to a new report.
According to PropTrack’s Market Insights report, realestate.com.au’s share of rental properties under $400 per week fell to a record low of 19.3% in September 2022.
This represents a decrease from 41.8% in March 2020.
Experts expect the supply of affordable rental properties to continue to decline over the next few months due to falling vacancy rates, declining purchase levels of first-time homebuyers and rising migration. says.
Here’s what you should know:
What did the report find?
According to the report, no capital market had more than a quarter of listings below $400 per week in September 2022.
In Sydney, one-fifth of rentals were advertised under $400 a week a year ago, but by September 2022, that’s down to one-tenth.
A new study from PropTrack found that the percentage of rental properties under $400 per week listed on realestate.com.au fell to a record low of 19.3% in September 2022. sauce: SBS News
In Hobart, Darwin and Canberra, less than 1 in 10 properties were rented for less than $400 per week.
In rural areas, the percentage of rental properties advertised for less than $400 per week fell from 57% to 28%.
The total number of properties available for rent has dropped 31.4% since the start of the COVID-19 pandemic.
What caused the rent increase?
PropTrack economist Angus Moore attributes the record lows to low vacancy rates and a lack of rental options.
“The main reason rents are rising so quickly at the moment is that there aren’t many rental properties available,” he said.
“Vacancy rates are very low, the number of rental properties listed on realestate.com.au is significantly lower than before the pandemic, and the capital has even more people owning it than it did a year ago. .”
Catherine Birch, senior economist at ANZ Research, said Australia faces limits on the amount of new homes it can build due to increased demand and supply chain issues in the construction industry.
“There may be a lot of people waiting for a new house to be built…and if that house is built, they can move there now and stop renting and it will open a rental property.” .Someone else.”
What is the impact of rising interest rates?
In October, the Reserve Bank of Australia (RBA) raised the official cash rate by a quarter of a percentage point to 2.6%, the highest level since July 2013.
The central bank has now raised interest rates for the sixth month in a row, and many Australian mortgage holders are paying hundreds of dollars more each month than at this time last year.
With affordability becoming an increasingly constraining and rising interest rates that reduce people’s ability to borrow, the pressure on the rental market is increasing, Birch said.
“If people cannot enter the new housing market, they will continue to rent.”
pandemic effect
Moore said the COVID-19 pandemic has also had a major impact on the Australian property market, affecting rental availability in two key ways.
“The first is that we actually saw a lot of investors sell their rental properties during the pandemic, which means we have less rental inventory today than we otherwise would have. I will,” he said.
“But the other is that rental demand has increased significantly as rental households have shrunk due to the pandemic.
“Part of the reason is that share house living has become less appealing to many people, so there are fewer share houses and more one and two bedroom units.”
During the pandemic, Australia also saw a surge in urban-to-rural migration.
Regional movement
In December 2020, the government’s population center estimated that the capital’s net loss was The quarter to June 2020 was the largest quarterly net change on record, more than double the average observed over the past decade.
Moore said this internal migration has led to lower vacancy rates and higher prices in regions of Australia.
“We’ve seen a lot of people move from the capital to the countryside, but the countryside doesn’t have a very deep rental market,” he said.
“As a result, we have seen a lot of available inventory skyrocket, and that has persisted for most of the last two years… Rents have picked up very quickly in some of these areas. up and zero vacancy.”
what happens next?
When it comes to forecasting, it may take some time for renters to feel at ease.
“Rent growth appears to have slowed recently, according to some Core Logic data, but rents are still rising and we expect that to continue as long as vacancy rates remain low. increase.
“In Sydney and Melbourne, vacancy rates are likely to continue to decline, with rebounding population growth contributing to that,” Mr Birch said.
“We are now making substantial gains in net immigration to Australia and anyone who comes to Australia needs a place to live.”
