Australian tenants face a worsening rental crisis, with competition for homes soaring as the proportion of vacant rental properties falls to its lowest level in years.
The national rental vacancy rate fell to 1 per cent in March, halving year-on-year, with all capital cities now operating in a landlord’s market, Domain’s latest Rental Vacancy Rate report found.
Landlords in competitive markets are being inundated with applications amid the shortage of available rentals, and tenants are increasingly offering above the advertised price, or up to a year’s rent in advance, to try to secure a home, agents have reported.
Domain’s chief of research and economics, Nicola Powell, said Australia was facing a rental crisis, with already strained rental markets under increased pressure following the reopening of international and domestic borders.
“With many cities already sitting at record high asking rents, combined with the current tightening conditions, we’re likely to see rental price increases continue, causing worsened conditions for tenants,” Dr Powell said.
Monthly vacancy rates
Vacancy rates nationally, as well as in Sydney (1.4 per cent), Canberra (0.5), Brisbane (0.7), Adelaide (0.2) and Perth (0.5), have reached their lowest point since Domain records began in 2017, and Darwin (0.5) is close to a record low.
Hobart recorded a marginal increase, but with a rate of 0.3 per cent it remains one of the most competitive capital city markets.
“In some of our cities it is like finding a needle in a haystack when trying to find an available rental,” Dr Powell said.
Sydney and Melbourne had the biggest monthly fall in vacancy rates, now at 1.4 per cent and 1.8 per cent respectively.
Dr Powell said inner-city markets hard hit during the pandemic were subject to a resurgence in demand as borders reopened and tenants took advantage of lower rents. While demand had risen, supply had fallen, with some rental properties having been sold during the pandemic while others came back to the short-term rental market as tourism resumed.
Inner Brisbane, which recorded a vacancy rate of 1.5 per cent, had one of the largest monthly falls of the capital city regions. As did areas such as Indooroopilly, Sherwood, Nathan and Salisbury.
“There’s a lot of people out there searching right now; a lot of places are getting snapped up pretty fast,” said Kelsey Smith, a business development manager at Living Here Cush Partners.
Rental demand had risen as Brisbane attracted more interstate arrivals and rapidly rising property prices left more aspiring homeowners renting for longer, Ms Smith said. The recent floods had further exacerbated the rental shortage in some markets, she added.
While she did not want to encourage rent bidding, Ms Smith said strong competition was prompting more tenants to offer above the advertised rental price, noting that one Bulimba home recently leased for an additional $150 a week to tenants relocating from interstate. Landlords, meanwhile, were increasingly looking to test demand with above-market prices, which they would lower if they had no takers.
Inner-city markets have registered large declines in vacancy rates, and the strongest competition is still being seen in middle to outer ring suburbs and lifestyle locations, which tenants flocked to while working and studying remotely during the pandemic.
In the Maroondah region in Melbourne’s east, which has one of the city’s lowest vacancy rates of 0.6 per cent, nine out of 10 homes were being leased after the first open home, said senior property manager Anne Johnsen, of Fletchers Maroondah.
In a bid to beat the competition, more tenants were offering to pay above the advertised price, typically up to $20 a week extra, and some were offering several months’ worth of rent upfront, sometimes a year in advance.
“It’s crazy – that’s how desperate people are to secure a home,” Ms Johnsen said, adding that personalised letters appealing to landlords and property managers were also becoming more common.
Declining vacancy rates and rising rents were making it harder for tenants to find, and hold on to, an affordable home, said Tenants’ Union of NSW chief executive Leo Patterson Ross.
Renters were increasingly compromising on the size, location and quality of properties to secure a rental, while existing tenants were more likely to let unanswered repair requests or other breaches of the tenancy contract slide.
“They know they are susceptible to being asked to move on and will have a hard time finding somewhere and likely face higher rent for a smaller place or have to move even further away,” Mr Patterson Ross said.
Rents were on the rise for existing tenants, with even greater hikes between tenancies, and more properties were now leased above the advertised rate, with rent bidding on the rise.
Increasing housing supply was key to addressing the crisis, Mr Patterson Ross said, particularly social and affordable housing targeted at helping those left behind by the private market. Such tenants would not be in a position to use first-home buyer assistance schemes to purchase a home – which Prime Minister Scott Morrison recently described as the best way to support renters.
Boosting the supply of social and affordable rental housing would ease pressure for the most affordable rentals, which would then flow through to the broader market, he said. A national housing strategy was also needed, he said.
Article Source: www.brisbanetimes.com.au
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