The Australian Landlords Association’s warning in 2021 about an impending rental crisis has now become a reality, as increased demand from migrants, international students, and working holidaymakers strain the already limited rental supply.
Domestic landlords, who make up over 80% of residential rental property providers, are selling their properties due to concerns about rent freezes and bans on negative gearing, contributing to a shrinking pool of rental properties.
This decline in available rentals is compounded by the ongoing struggles landlords have faced during the pandemic, such as loss of rent, compliance issues, and increasing taxes and interest rates. As the property market remains strong, many landlords are choosing to sell their properties to private homeowners instead of first-time buyers, further diminishing rental availability.
Australia’s capital cities have experienced record annual rental increases, with CoreLogic’s national dwelling rental index up 10.1% year-over-year.
The combined capital cities’ annual rental increase of 11.7% is driven by the -20.9% reduction in rental listings compared to the previous year and -39.8% below the five-year average. Vacancy rates are near record lows, and with the exception of Darwin and Canberra, all capital cities have seen a rise in dwelling rental values.
Renters are unlikely to find relief in the short to medium term, as rental supply remains low and the influx of migrants and international students continues. This trend is further exacerbated by below-average new unit approvals since 2018, which will contribute to ongoing supply issues in the rental market.
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