Why Is the Cost of Rental Rates in Australia Rising?
As the back-to-back headlines of the rising house and mortgages rates in Australia continue to dominate the news, more and more Australians are now opting to rent instead of choosing personal property. Unfortunately, the cost of rent also continues to rise (albeit slowly) as the demand continues to grow over time.
The Rising Rental Rates
According to the latest quarterly rental review conducted by CoreLogic, the national average rate rose up to 0.3% with a value of $429 this quarter (as of June 2018), deriving at a total increase of 1.8% earlier before the year ends.
Although the latest quarterly change is still less than half of the 0.7% increase recorded during the same time last year, the review stated the rate will continue to rise for the remaining second half. According to the review, the average capital city rent increased by 0.3 during from the first three months up to June, while a significant increase of 0.4% was also recorded in regional market for this year.
These trends are expected to continue over the year as the average capital city rent increasing by 1.4%, compared to the 3.1% increase in regional areas.
The Anticipated Increase in Rental Rates
Kusher also revealed that although the first half of 2018 projected a softer rental growth across the nation compared to 2017’s Statistics. However, with off-plan unit settlements issue continue to persist, Kusher anticipated the rental stock will continue to rise for the next coming months. The review also revealed the average rental rates of houses increased by 1.9% over the year, relatively higher compared to the 1.7% lifts for units in 2017.
Interestingly, the national rent rates for units is higher with its price starting at $434, compared to renting houses which only sits around $427. Hobart currently holds the title of the hottest capital city market based on price growth. Aside from that, the review also recorded the highest increase in rental rates of 1.9% in the city, compared to Canberra’s 1.3% during the second quarter.
The Problem in the Housing System
The capital gains in other capital ranged from 0.1% in Sydney up to an astounding 4.5% in Canberra. Meanwhile, Darwin was the only capital to maintain the average rents at 1.7% over the year. Darwin’s median home price also decreased compared to most capital for the past 12 months.
Despite the lagging increase for the past year and its dollar value, Sydney remains the capital bearing the highest average rental rate across the country, with its rate starting at $583, followed by Canberra at $536 and Darwin at $464 respectively. Adelaide followed the list at $375, while Perth remains the cheapest capital city to rent at $377.
According to the University of New South Wales‘ researcher, Dr. Chris Martin, the rising rents are dire indications of Australia’s problem in the housing system. He said the rents reflected the real demand for acquiring a decent house to live.
Furthermore, he added the current income failed to meet the increasing rental index in Hobart. What the Tasmanians need is an access to affordable housing, but they were forced to pay the high rental rates instead. Dr. Martin also criticized both the state and federal government when they published the bilateral agreement between Tasmania and Commonwealth last week.
The bilateral agreement was entitled the new National Housing and Homelessness Agreement, which only commits to producing 15 social housing and dwellings per annum in Tasmania. According to him, that’s relatively low compared to the thousands of low-income Tasmanian households who need an immediate access to an affordable housing system! He stated that the government needs to increase the supply of housing, and even rental housing for low-income households to battle the rising rates of mortgages.
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