Australia’s rental crisis is continuing to worsen, with new research revealing 20 regions where prices will continue to soar by up to $5,200.
The country’s vacancy rates are at their lowest since April 2006 and rental prices have subsequently gone up as a result.
Rental prices in capital cities increased by 11 per cent in the 12 months to March and regional areas experienced an even higher 13.1 per cent year-on-year growth.
This led to buyers agency InvestorKit examining 300 areas across the nation to determine where renters can expect the most pain.
Their research found “clear signs” rental prices in 20 regions would continue to increase by $2,600 to $5,200 in the coming 12 to 24 months.
These areas include major capital cities like Brisbane, Adelaide, Perth, Hobart and Canberra.
The vacancy rate in Greater Brisbane has been falling over the past five years and is sitting at 0.8 per cent.
This has subsequently caused Brisbane’s average rental price to increase by 11.9 per cent over the past year while new house supply remains low.
Vacancy rates in Greater Adelaide and Perth sit at 0.3 and 0.5 per cent respectively, with rental prices increasing by 11.3 and 12.5 per cent in the past year.
Hobart’s vacancy rate is the lowest among Australia’s capital cities at just 0.2 per cent.
This has led to a 9.9 per cent increase in rent over the past year and a massive 56.3 per cent rise over the past decade.
Canberra’s 0.5 per cent vacancy rate has caused rental prices to increase by 12.1 per cent over the past year, with the city’s population growth of 17 per cent over the last 10 years ensuring rent will continue to go up.
While the report found that sub regions in Sydney and Melbourne had strong rental conditions, these cities were not as bad overall as other markets in Australia.
The two cities’ slightly higher vacancy rates were linked to a combination of unaffordable rental prices, people’s want of space instead of attached dwellings and a lag of oversupply in properties.
The remaining 15 areas where rental princes will arise are:
Tasmania–Devonport and Burnie-Ulverstone;
Queensland – Nerang, Bundaberg, Maryborough, Buderim, Toowoomba;
ACT/NSW – Queanbeyan, Lake Macquarie East, Kiama-Shellharbour, Wagga Wagga;
South Australia – Barossa and Yorke Peninsula;
Victoria-Warrnambool and Shepparton.
InvestorKit head of research Arjun Paliwal said the increasing rental prices in these areas were indicative of their low vacancy rates.
“A rental crisis is often defined by vacancy rates at 1 per cent or lower, so it’s concerning to see this continuing to worsen,” he said.
“We’re currently at 0.7 per cent – 41 per cent lower than 12 months ago, when we were at 1.2 per cent.
“Most of the 20 regions chosen in our report have vacancy rates lower than the national average and the majority are even lower than 0.3 per cent.”
Mr Paliwal said numerous factors were behind Australia’s rental crisis.
“These record-low vacancy rates are due to increasing demand and limited supply caused by factors including greater housing demand, particularly for detached houses due to the work-from-home trend and desire for a better lifestyle,” he said.
“The recent housing boom and prices are forcing people to stay in the rental market longer, more Gen Ys are moving out of home, there has been strong population growth in regional areas and a fall in property investor activity over recent years.”
On what Australians can do during these difficult times, Mr Paliwal encouraged people to explore the possibilities that remote working had created and see if they could continue their job in a different area or even another state where rental prices were better.
“There’s obviously been a change in how we can work remotely,” he said.
“I would challenge people to see what opportunities that (moving) brings not just from an enhanced lifestyle but an enhanced financial circumstance.
“It’s not like everyone can pack themselves up, but I think that’s a big change that wasn’t available to many people pre-pandemic.”
He also encouraged people to improve their financial circumstances by testing their employment prospects while a record amount of jobs are being advertised.
But he warned renters that the market would not improve anytime soon.
“It is still due to get a little bit worse before it gets better… there is no real quick fix to this,” he said.
“I’ve laid out a few solutions that we feel could come into perspective, but these can take years and sometimes many years to come to fruition.”