They say that when one door closes, another opens. But if you’re a renter in Australia right now, that mightn’t be the case. A more apt expression might be the one about being up a certain creek sans paddle.
Vacancy rates across Australia have officially hit crisis level. Since May 2020, the number of homes available to rent in Australia’s capital cities has decreased by a staggering 54%, with Sydney’s vacancy rate halving this year alone. The situation is dire across the board, but worst in Adelaide, where the vacancy rate sits at just 0.3%, followed by 0.5% in Hobart, and 0.7% in Brisbane. Sydney fairs slightly-better-but-still-not-great at 1.3%, with Melbourne’s vacancy rate at 1.4%.
To put that in perspective, a “healthy” rental market is usually considered one with a 3% vacancy rate, while in New York, anything under 5% is classified as a “housing emergency.” Yikes.
How did we get here? Our housing supply shortage has been exacerbated by red tape for re-zoning new developments, investors/landlords selling to capitalise on high property prices in a booming market and the pandemic’s affect on both the price and supply of building materials and a labour shortage in the construction industry.
In a tight rental market, prices tend to go up, but the RBA’s rate hikes complicate the situation further, as investors who are yet to pay off their mortgage will use the tight rental market to pass on their higher monthly repayments to their tenants. With the official interest rate jumping 2.5 percentage points in six months, variable mortgage repayments have increased by many hundreds (or thousands) of dollars a month.
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Last month, the number of rental homes available in Sydney fell 1.3% to just over 10,000, with Greater and Inner Western Suburbs like Parramatta, Strathfield, and Ashfield accounting for a large portion of vacant rentals homes (4.9% and 4.5%, respectively).
Meanwhile, renters in Bateman’s Bay on the NSW south coast have exactly a zero percent chance of signing a lease there, while most small towns on the NSW mid-north coast are also an unlikely bet. In Laurieton, south of Port Macquarie, the rental vacancy rate is 0.7%, while Tuncurry and Nambucca Heads both sit at around 0.4% vacancy. In the Blue Mountains, once considered a generous rental market, the vacancy rate has hit at an all-time low of 0.5%
With properties as scarce as they are, many renters have found themselves accepting otherwise unacceptable living conditions out of fear they’ll be kicked out. Stories of poorly maintained properties and outrageous rent increases are painting an alarming picture and there is no political appetite to find meaningful long-term solution in sight.
