Australian landlords passed on their biggest-ever rent increases in 2022, and the cost-of-living situation is unlikely to ease significantly for tenants in coming months.
Last year, the nation's median rent jumped by a "record high" 10.2 per cent to $555 per week, according to property analysts CoreLogic.
Brisbane and Adelaide had the largest rent increases (with a roughly 13 per cent hike), followed by Sydney and Perth (up by around 11 per cent over the year).
When COVID-19 first struck in early 2020, rents plummeted as Australia's economy briefly fell into recession (like many other nations), sparked by lockdowns to prevent a surge in infections and deaths.
At the time, it was easy to score a bargain and rent a CBD apartment for much cheaper rates.
This was particularly true in Sydney and Melbourne — the two cities that were hit especially hard by the exodus of foreign workers and international students when Australia's borders were closed.
But, from September 2020, the rental market began to recover. In just over two years, the median rent has surged 22.2 per cent.
A potential 'turning point' for renters
One silver lining is that the rents have recently been rising at a slower pace.
In the December quarter, rents increased by 2 per cent (compared to a 2.3 per cent rise in the September quarter), according to CoreLogic's numbers.
“While a slowdown in the pace of rent rises could be a sign that the rental market is starting to shift, it's not great news for tenants just yet," CoreLogic's head of Australian research, Eliza Owen, said.
"Rents are still rising in most capital cities and regional areas, with vacancy rates low."
Ms Owen said rents had been rising at a slower pace because more people were advertising their properties.
More than 50,000 rental properties were listed in the four weeks to December 11, which was the highest number in 10 months.
“However, it’s important to recognise, despite the increase in rental listings, the figures remain 13.8 per cent lower than the previous five-year average for this time of year," Ms Owen added.
"It is not entirely clear whether the rental market will continue inching toward a turning point, or if this is a temporary, seasonal reprieve due to higher new listings through December."
Rents to jump in biggest cities
Meanwhile PropTrack, owned by REA Group (which runs a popular real estate listings website) has also released its own numbers on the rental market, confirming the same trends.
According to its data, Australia's median rent jumped 6.7 per cent to $480 per week last year. But in the December quarter, rents were flat, or unchanged.
Units also experienced a bigger annual rent increase (up 9.5 per cent), compared to houses (up 7.5 per cent).
"If you look at Sydney and Melbourne, basically, they've hardly seen any rental growth since the onset of the pandemic," REA's director of economic research, Cameron Kusher said.
"So I really do feel like rents are still going to go up quite a bit again this year in Sydney and Melbourne.
"Migration is coming back, and most people who migrate live in Sydney or Melbourne. They need somewhere to rent.
"Also, people moved away ... their work now is possibly saying to them, 'We need you in the office three or four days a week.' So it's not as viable to live regionally."
Calls for government to take greater action
The latest reported increase in rents come after several years where rents have surged, concerning new Homelessness Australia chief executive Kate Colvin.
"Families are being pushed to the brink and many have already become homeless. Last year homelessness services had a 9.2 per cent jump in people seeking help because of financial and housing issues," she said.
"So with vacancy rates at record lows and more rent rises coming their way, 2023 is shaping up to be disastrous for struggling renters."
Ms Colvin said governments could do a lot more to get affordable rentals on the ground, and to soften the impact on renters by increasing Commonwealth Rent Assistance.
The sentiment was echoed by Maiy Azize, national spokesperson for the Everybody's Home campaign, who hears regular reports of people living in tents, sleeping in cars, or couch surfing for months and years on end.
"There is only so much people can pay," she said.
"The government should raise rent assistance so that it keeps up with the cost of rent, and expand it so that goes to more people in need.
"People from all walks of life are being plunged into housing stress and poverty, and too many are being forced to choose between paying rent or putting food on the table."
Approvals fall
The problem could be about to get worse. Australia already does not have enough dwellings for its population, and far fewer than the average per 1,000 people in similar developed nations.
Approvals for new dwellings are down 15 per cent year on year, meaning there will be fewer houses being built as migration rebounds and more people start to call Australia home.
"For years governments have been walking away from social housing, relying on the private sector to deliver affordable homes," Ms Azize said. "These numbers show that's a dangerous approach."
"The private sector will only build when it's profitable. Only the federal government can build affordable homes for the people who need them, when and where they need them.
The government has committed to a massive boost in the number of social housing dwellings it will build, promising to construct 20,000 in coming years.
Even if the scheme is successful that will still be hundreds of thousands of "units" of housing less than demand.
