Asking rents jumped by as much as 21 per cent in some capital cities over the past year and further sharp rises are likelyin coming months as the number of available rental homes falls to critical levels, data from SQM Research shows.
Across the combined capitals, asking rents for houses climbed nearly 15 per cent during the year, while unit rents rose 11 per cent.
“The magnitude of rental increases across the country is unprecedented,” said Louis Christopher, SQM Research managing director.
“I’ve never seen such sweeping rental increases nationwide, ever.”
The growing number of tenants living on their own, combined with the return of international students had fuelled strong rental demand at a time when supply was diminishing rapidly, Mr Christopher said.
“Some landlords have taken their rental properties off the market for their personal use during the pandemic, and many have not returned into the market,” he said.
Brisbane posted a 21.2 per cent rise in house rents – the highest increase of any capital city – followed by Sydney with 19.1 per cent.
Even more worrying is the social ramifications. I think we’re going to see a rise in homelessness. — SQM’s Louis Christopher
Asking rents for houses in Adelaide lifted by 15.5 per cent, they were up by 12.2 per cent in Perth and by 16 per cent in Canberra. House rents climbed 10.7 per cent in Darwin, rose 7.6 per cent in Melbourne and 7.1 per cent in Hobart.
The number of available rental homes had fallen sharply across the central business districts and inner-city suburbs in the past 12 months.
Vacancies in the Melbourne CBD had slumped by 69.1 per cent to 556, it tumbled by 70 per cent to 141 in Brisbane and declined by 45.2 per cent to 323 in Sydney CBD.
In the Adelaide CBD, the number of vacant rental apartments plummeted by 78.7 per cent to 82 and dropped by 37.8 per cent to 84 in the Perth CBD.
Sydney’s inner west recorded a 54.1 per cent drop in the number of vacant rental properties. The number fell 53.8 per cent in the eastern suburbs and 47 per cent on the lower north shore.
In Melbourne’s inner east and Bayside areas, vacancies more than halved.
They also halved on the Gold Coast, while in inner Brisbane they shrank by three-fifths.
“Rental properties that are leased out are not getting replenished, that’s why we’re seeing ultra-low vacancy rates,” Mr Christopher said.
Vacancy rates had fallen to 1 per cent nationwide in March, the lowest level since 2006.
The share of empty rentals has dropped in Sydney, Melbourne and Brisbane to 1.6 per cent, 1.9 per cent and 0.7 per cent respectively.
The CBDs, which bore the brunt of the international border closures, have all recovered, with vacancy rates dropping to 2.4 per cent in Melbourne, 3.4 per cent in Sydney and 2.7 per cent in Brisbane.
“The rental crisis has deepened with rental vacancy rates across the country falling to just 1 per cent,” said Mr Christopher.
“As a result, market rents have exploded. And the recent monthly data suggests we are still not at the worst point of the crisis.”
The sharp rise in rents would also weigh on the RBA’s decisions on interest rates, Mr Christopher said.
“This is a cost of living issue, and it’s going to feed through into inflation reading eventually,” he said.
“That’s why we’ve been jumping up and down saying ‘Watch out for the inflation rate’ because rents and housing costs make up a quarter of the CPI reading, so I expect the number is going to be big when it comes out because of these steep rises in rents.
“But even more worrying is the social ramifications. I think we’re going to see a rise in homelessness as a result. But the political parties have not come up with policies to address this.”
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/house-rents-jump-21pc-as-vacancies-fall-20220412-p5acu5
