Since the pandemic first arrived on Australian shores in early 2020, the outcomes faced by people in different states and regions of the country have been disparate. From border closures to localized lockdowns, postcode or region has sometimes defined our lives.
But even as the direct impact of the pandemic begins to fade from our lives, its legacy, and the changes in the way we live our lives that it has wrought, continue to influence outcomes across the country.
One place where the results are quite varied is in the different rental markets across the country. In some markets rents are falling, while in others they continue to rise extremely rapidly. But even within individual cities or regions, the results can be wildly divergent when comparing the growth in housing and house rents.
An unexpected rental crisis…
For nearly two years, Australia’s borders have been largely closed to international arrivals, leading to the biggest decline in net overseas migration since World War I.
At first glance, one might assume that this would have led to a plentiful supply of housing for new owners and tenants, after all houses were again built in record numbers during this period, all at a slower pace due of the pandemic. and supply issues.
But in the end, quite the opposite happened. In the words of managing director of property data provider SQM Research, Louis Christopher: “The Australian rental crisis is deteriorating to levels unprecedented for our current generation.
There is a long list of reasons and theories as to why this has happened, we explored some of the driving factors in a recent article, including the decline in colocation and changes in inland migration patterns.
These factors have also been exacerbated by the late completion of new homes.
In the last pandemic-spared quarter, there were just over 188,000 new homes under construction nationwide. At the end of the March quarter of this year (the latest data currently available), there are 240,000 new homes currently under construction.
Of the 52,000 more homes currently under construction compared to pre-Covid, a significant proportion of these households would be looking for alternative housing while they wait for their home to be completed.
This is putting significant additional pressure on a rental market already grappling with the brunt of pandemic-induced changes and rapidly rising immigration levels.
A divergent path
Housing rents rose 4.3% nationally in the September quarter and 10.3% over the past 12 months, according to housing data provider PropTrack.
But it is here that the trajectory of different rental markets, homes and units begins to diverge. For example, in terms of homes in the regional rental markets as a whole, rents in the September quarter were either flat or falling in all states and territories except Western Australia.
At the other end of the spectrum, unit rents in Melbourne and Sydney jumped in the September quarter, up 5% and 4% respectively. With the country’s two largest cities being the main destinations for new migrants and international students, rents in Sydney and Melbourne could continue to rise.
According to figures from the Australian Bureau of Statistics (ABS), in the March quarter the country recorded its highest ever quarterly net overseas migration rate.
With the Albanian government’s plans to increase the number of permanent non-humanitarian migrants to 195,000 a year, its highest level ever, this could continue to put pressure on rents in areas popular with newcomers.
As you can see, the issue of rising rents is a very disparate issue, with pricing pressures waning in some markets and others continuing to rise sharply. This places rental market players in very different positions depending on their location and whether or not they are looking for a house or accommodation.
In some cases, such as parts of the Sydney and Melbourne unit markets, landlords will likely continue to hold all the cards when it comes to further rent increases.
In other rental markets, such as some real estate markets in regional areas as a whole, much of the leverage held by landlords has evaporated, as seen in flat or falling rents in the markets. regional rentals during the September quarter.
While some Australians can and will pay more rent if they have to, in some markets tenants have apparently already approached or reached their limits. As the old saying goes, “You can’t get blood out of a stone” or in this case, higher rent from tenants in the area with no ability to pay.
Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator