The suburbs where rents have jumped 30% in a year
Renters across the country have been hit with some of the largest annual rent increases in years according to new data released by PropTrack.
The town of Katanning, in the Great Southern Region of Western Australia, topped the overall list with a 47% annual increase in the median rental value of a house, followed by Port Broughton in South Australia which recorded a 43% rise.
Units weren't far behind, with the median value of units in inner-city suburbs like Melbourne (42%) in Melbourne and Darlington (38%) in Sydney notching steep increases over the past year.
"What we're seeing at the moment is that rents are rising at a rate that's well above the long term average. And in some of the areas where we've seen the fastest rent growth across the country, we're seeing growth just shy of 50%, which is absolutely staggering," says PropTrack economist, Anne Flaherty.
"What's also interesting is that it's not just certain regional areas seeing these rent rises. We're seeing this across a really broad range of locations across the country, from metropolitan and city areas to regional areas."
The rate of growth in many of these suburbs has, according to Flaherty, translated to rent increases in the hundreds of dollars per week for tenants.
And though some of largest increases are outliers, they highlight a wider pattern of substantial price growth.
"What we're seeing is that across the board, private rents are going up very, very rapidly. So even though these are at the more extreme end, they are absolutely part of a broader trend of rents being well above what we typically see."
So what's behind the substantial price growth witnessed over the past year? Flaherty believes that it ultimately comes back to the issue of supply.
"We've seen a lot of investors leaving the market during the last five years, and this accelerated during COVID. About 90% of Australia's rental supply is provided by private landlords, so with more landlords selling than buying, that's meant that overall supply has been impacted," she says.
"We've also seen properties that were formerly short term rentals, like Airbnb's, that had joined the long term rental market during COVID, now reverting back to short term-style properties.
"Of course, our population is also growing again, and we've seen a really staggering increase in searches from overseas actually. For example, searches from overseas to rent in Australia doubled between December and January, so that's going to flow through into increased demand as well."
Action urged as rent hikes pile on pressure
As the cost of renting a home has risen in many parts of the country, so too has the financial pressure on renting households at a time when other livings costs have also accelerated at a faster pace than usual.
In a recent survey conducted by financial comparison website Savvy, three in five renters reported that they were dedicating 31% or more of their weekly income towards rental costs, while a quarter said they were spending between 46% and 60% of their income on rent.
For Joel Dignam, the executive director of rental advocacy group Better Renting, there's no doubt that the recent growth in rental prices, and the impact it's having on renters, is beyond anything he's seen.
"The situation is the worst it's been at any time - not only in recent years, but in recent memory. In short, we are in a new state of intensity in terms of these rent increases," he says.
"We have certainly heard from renters on the ground who have been getting whopping rent increases in that 30% plus range. It's not typical, but it illustrates what's happening to some people and it illustrates that there aren't any legal restrictions on the sorts of rent increases that a landlord can try."
Unfortunately for renters, the outlook ahead doesn't look any easier, with predictions of further rental price growth in the short term.
"Our expectation is that rents have not yet hit their peak," says Flaherty. "We think that rents will continue to rise, and that's off the back of the fact that we're continuing to see that trend of more investors selling than buying, and we're continuing to see population growth."
"Critically, the supply of new housing is very unlikely to keep up with population growth. Developers are currently facing very challenging conditions because it's very expensive to build at the moment and it's taking a long time to build. So that's hindering supply that we desperately need."
With further increases potentially on the way, advocacy groups like Better Renting are calling on governments to intervene by introducing measures to safeguard tenants against unfair evictions and excessive rent hikes.
"What is happening here is a supply shock and that means that landlords can get away with increasing rent because, fundamentally, people can't opt out of housing," Dignam says.
"In the short term we see a role for governments to regulate rent increases and perhaps set a percentage cap on how much a rent increase can be to stop this crisis of people being forced out of their homes or being pushed to the wall trying to afford rent increases. That isn't the long term solution on its own, but it's something that we can be doing now to try to help people.
"Pairing that with ending unfair evictions is really important, because landlords are ending tenancies so that they can get a new tenant in paying much more rent, and that's pretty rough on the person whose life is turned upside down by that."
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