Tuesday, 7 March 2023
by Berkeley Lovelace
Alas, demand for Aussie rentals is just a million miles ahead of what we’ve been building and the result, according to new PropTrack data, is not good.
The share of properties listed for rent below $400 per week has just about halved over the past year, as the rental crunch which began during the pandemic is being given fresh intensity as the central bank lifts the cost of money to combat rising inflation.
The imbalance of people looking for a place to rent – and places – has got demand far outstripping supply. Australian weekly rental prices are continuing to ascend, while the equal and opposite reaction is also true as vacancy rates plummet.
PropTrack says it’s been seeing a huge evaporation of rental availability around the country.
Most crucially the availability of properties which are under $400 a week since the onset of the pandemic has hit calamitous new lows. And it’s the major urban centres which are now hitting the renters hardest.
The share of total rental listings under $400 per week has halved over the past year in Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra and regional WA, PropTrack’s director economic research Cameron Kusher says.
“We are now starting to see much larger declines in the share of listings under $400 per week in capital cities as opposed to regional areas.”
The size and shape of the problem is also morphing, with Kusher saying houses are also copping stock declines at a faster than units.
“With demand for rentals intensifying, we see no reprieve for tenants in the coming months. The fall in the availability of more affordable rentals and the surging competition for rental stock is creating challenges for those on lower incomes or government support payments as they try to source increasingly scarce rental accommodation.”
The latest data supports last week’s release from Domain where around the country vacancy levels fell to a new record low of just 0.8% of rental residential properties.
Domain’s chief of research and economics Dr Nicola Powell says while Melbourne copped the worst drop in vacancies, (down 64% YoY), the national collapse in rentals is a full third worse than last year.
Dr Powell has said the rental crisis has been exacerbated by a flood of returning international students into the already tight market, which in itself has boosted demand.
There’s been a stranglehold on new housing supply and investment activity, a boom in short-term renting – a la Airbnb et al – and even household sizes have plummeted people at a time when an RBA study suggests COVID-19 alone has created demand for nearly 150,000 new homes.
The share of total properties listed for rent on realestate.com.au for less than $400/week fell to 17.6% in February 2023 (the lowest it’s been since 2018)
In March 2020, at the beginning of the pandemic, 42.5% of all rental listings were under $400/week, with the share more than halving to just 17.6% in February 2023
The share of total rental listings under $400/week has hit the lowest level since 2018 in all capitals cities, except Hobart and Darwin
The share of total rental listings under $400/week has halved over the past year in Sydney, Melbourne, Brisbane, Adelaide, Perth, Canberra and regional WA
And the share of rental listings under $400/week continues to fall as the cost of renting rises and supply remains super constrained
Just 14.6% of capital city rental listings were under $400/week in February 2023
The share was 25.9% in regional areas
Houses have seen the strongest decline, falling from 42.5% at the start of pandemic to 13.6% in February 2023. Units saw a 20.4 percentage point decline over the same period
Sydney, the ACT and Darwin all have the lowest share, with less than 9% of listings in each city under $400/week
In the ACT, just 1.9% of all rental listings come in under the $400 price point
In February 2022, 32.8% of all properties listed for rent were under $400/week, highlighting a significant drop in supply over the past year
Over the past year, the share of houses for rent under $400/week has fallen from 25.2% to 13.6%, while for units it has dropped from 38.6% to 22.1%
The share of rental listings under $400/week has fallen 24.8 percentage points since the start of the pandemic
Regional areas saw larger percentage point falls in the share of listings under $400/week throughout the pandemic
However, the decline has been much larger in capital cities over the past year as demand for rentals shifts back towards the capitals