Renters are facing relentless market pressures as national rents continue to accelerate.
Nationally, the median rent for a dwelling has surged 40.6 per cent over the past five years, adding an average $204 per week to household rental commitments, Cotality data reveals.
That takes the median rent for a dwelling, which covers both houses and apartments, to a record $705 per week.
The latest figures show rents lifted 1.6 per cent over the June quarter, while annually there has been a hike of 5.9 per cent in rental growth.
The high rental price comes amid worsening affordability pressures and a chronic rental shortage, with vacancy rates stuck at 1.6 per cent nationally Cotality data shows.
The rapid acceleration, running well ahead of household incomes, is driving severe rental affordability constraints.
"We are seeing a profound shift in affordability across the market," says Gerard Burg, head of research at Cotality Australia.
"In March this year, the typical household was allocating roughly one-third of their gross income to rent, compared to around 27 per cent just five years ago.
"While quarterly rental growth has eased slightly, the underlying supply deficit means conditions remain increasingly challenging for tenants."
He said that higher rents are now having an impact on growth.
"We're approaching a threshold where rental affordability acts as an increasing constraint on further growth, particularly in regional areas where lower median incomes mean households are spending upwards of 35 per cent of their income on rent."
Rising rents are primarily being driven by a supply and demand issue. And low vacancy rates leave tenants with very little market leverage.
For investors gross rental yields are expected to continue to rise over the near term amid deteriorating home value growth and sustained rental demand.
"However, with affordability boundaries stretched to their limits, the pace of rental growth in the coming quarters will increasingly be dictated by what tenants can realistically afford to pay," Burg says.
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Director of Canberra property management firm Little Bird Properties, Heidi Rosin admits while the rental market is tight, conditions are more balanced than they were a year or two ago.
"Well-presented, realistically priced properties are still leasing quickly, while tenants are becoming more selective and price conscious. I see an oversupply of apartments and family homes available for long-term rental in high demand," Rosin says.
Rosin says that landlords contemplating putting the rent up should first review and discuss the options with tenants early, well before the end of the tenancy.
"Keep increases in line with market conditions. Fair increases and open discussions keep good tenants in place," she says.
