Rental affordability under the spotlight

It aims to investigate the government’s actions to reduce rent or limit rent increases, the impact of rising rents on households, and factors affecting supply and demand in the rental market.

An interim report is expected to be presented by 23 September 2023 to aid in the deliberations of the national cabinet on renters’ rights, with a final report to be presented by 28 November 2023.

It comes as rental affordability has hit its highest level since June 2014, with 30.8 per cent of income required to service a new lease nationally, for a median income household, according to ANZ CoreLogic Housing Affordability Report.

In addition, Corelogic’s latest rental report showed national rents have surged by 27.4 per cent since the onset of the COVID-19 pandemic, resulting in a $127 weekly increase in the median dwelling rent across Australia.

CoreLogic economist and report author Kaytlin Ezzy warned that this rental affordability crisis may lead to an increase in average household sizes, as more renters opt to share houses to alleviate the burden of rising rental costs.

“While rental demand from overseas migrants is likely to remain strong for some time yet, particularly across the largest capitals, we’ve already seen a reduction in domestic rental demand via an increase in the average household size,” Ms Ezzy said.

Despite a surge in overseas migration and a persistent shortage in rental supply, rental growth has softened, implying that tenants are reaching their affordability limits, the report noted.

In addition, on the supply side, rental listings are significantly below the previous five-year average, with a national shortfall of approximately 47,500 rental listings over the four weeks leading up to 3 June.

Several factors, including extended rental hold periods and a sustained undersupply of medium- to high-density developments are contributing to the limited availability of rental properties.

While the high rental market has traditionally been appealing to investors, the rising interest rates have outweighed the benefits, prompting many investors to sell their properties.

Despite the ongoing shortage of rental listings, national vacancy rates have slightly improved, rising from 1.1 per cent in March to 1.2 per cent in June.

This indicates a modest increase in supply, albeit insufficient to meet the growing demand.

NSW rental commissioner

Meanwhile, the NSW Government announced (on 11 July) the appointment of Trina Jones as the first NSW Rental Commissioner.

The commissioner will work with the government to design and implement changes "that rebalance the rental market, making it fairer and more modern".

As part of her role as NSW rental commissioner, Ms Jones will work towards making it easier for renters to have pets in their homes ending ‘no-grounds’ evictions; implementing a portable bonds scheme that allows renters to transfer bonds from one property to another; as well as responsible for identifying and investigating other issues that are impacting the NSW rental market.

[Related: 'Less favourable' conditions drag rental investments down: Report]