Australian rents reach new peaks despite slower growth

Rents across the combined capitals for houses hit $650 per week in March, up $20 a week from the same month last year, and the same for units, up $30 a week from $620 from the same month last year, according to the Guardian.

In particular, house rents in Darwin rose by 7.7% to AUD700 (US$445) per week, while Perth recorded a 6.2% increase, bringing the average to AUD690.

Residential properties line the Sydney suburb of Birchgrove in Australia, August 16, 2017. Photo by Reuters

Vacancy rate remains lower than expected. The national vacancy rate stands at 0.8%, well below the 3% required for a balanced market, though slightly improved from last year’s 0.7%.

"Despite a softening of growth, the data suggests Australia is still very much a landlord’s market," said Nicola Powell, Domain’s research and economics chief. "Most cities experienced 5% or less annual change, a sharp drop from the double-digit gains seen in recent years."

The slower growth is attributed to higher supply, she added. "Increasing supply is slowing price growth and, while it is still not enough to fully meet demand, we can see that it is helping to rebalance some of the tightest rental markets."

Other analysts warn that the market is out of reach for most consumers.

Kasy Chambers, executive director charitable network Anglicare Australia, emphasized the severity of the rental crisis, stating that only 0.6% of rentals are affordable for a full-time minimum wage worker.

"We keep hearing that this election is about living costs, but housing is the biggest cost facing Australians," Chambers said, referring to the federal election next month to elect new parliament members.

Rents in two of Australia’s largest cities, Sydney and Melbourne, have risen by approximately 20% over the past four years, according to the Grattan Institute.

The public policy think tank noted that lower-income individuals, who are frequently renters, are dedicating a larger portion of their income to housing costs.

Matthew Bowes, a housing specialist from the Grattan Institute, stated that the swift rise in housing prices over the past two decades years has resulted in a two-speed economy.

"Those people who are able to access home ownership, they see rapid appreciation in their wealth over time, which allows them to expand their purchasing power and purchase larger homes," he said.

But those unable to enter the housing market are forced to allocate a greater share of their income to rent, without building equivalent wealth through housing over time, he added, as cited by the ABC.

Even middle-to-high income earners are experiencing rental stress, according to a recent study by campaign group Everybody's Home.

The report indicated that a single individual requires an income of AUD130,000 (US$82,600) to comfortably afford the national weekly asking rent for a typical unit.