Many factors driving a "perfect storm" in the rental market, says peak body head
The private rental market in Australia continues to face extreme pressure, according to a new report from the Real Estate Institute of Australia and REA Group, owner of realestate.com.au and property analytics company PropTrack.
The report examines key issues facing renters and investors in the current market, according to REIA president Hayden Groves.
“Vacancy rates nationally sit just below 1.5%, with advertised rents rising 6% for houses and 9% for units over the past year,” Groves said. “Renters in Australia now make up around 30% of households and housing stock. They face a competitive market, applying on average for six rentals before securing a new rental home. Seventy-five per cent of successful applicants feel they have had to compromise on features on their rental.”
Groves said rental conditions were at their tightest levels on record, spurred by a change in household formation, a severe undersupply of rental stock, construction industry woes and the return of immigration in the wake of the pandemic.
“There are many factors driving this ‘perfect storm,’ but often the key relationships within a rental transaction are completely overlooked in the broader mega and macro debate: that of renters, property investors and property managers,” he said.
Groves said that with the Greens pushing for a national rent freeze, it was vital for lawmakers to understand who supplied most of Australia’s rental stock.
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“An Australian property investor holds a mortgage and comes from a working household,” he said.”Investors are generally aged 35-65 years old, with more 35- 44-year-olds owning investment properties than 65- to 74-year olds. Seventy per cent of property investors only own a single investment property, and just under 20% own two investment properties. Less than 10% of all property investors own three or more properties.”
Property investment has grown as an investment class since 1980, when property investors accounted for about 4% of tax filers, REIA reported. Today, they make up 15% of tax filers.
Rental challenges
Kul SIngh, REA Group chief customer officer, said Australian renters currently face an array of ongoing challenges.
“We need supply to meet the growing demand, which is being further exacerbated by surging migration,” Singh said. “The fastest way to increase supply would be to mobilise ‘mum and dad’ investors who have demonstrated their willingness to provide rental stock to the one in three Australians that rent.
“Finding ways to incentivise them to participate instead of penalising them would go a long way in building confidence and creating stability in the property investment market,” Singh said. “We also need to address the current challenges in attracting and retaining property managers that are critical to managing the growing rental sector.”
Click here to access the report.
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