Renters at risk of stepping off ‘affordability cliff’

July 15, 2023 BY

Apartment rents surged in major urban centres, fuelled by rising demand for inner-city living. Photo: JOEL CARRETT/ AAP IMAGE

RENTS are still climbing across most pockets of Australia and nudging more tenants towards an affordability tipping point.

Two separate datasets on the rental market showed rents lifting across most capital cities and combined regions.

Property data firm CoreLogic recorded a 2.5 per cent lift in national rents over the June quarter to be 9.7 per cent higher than 12 months ago.

Domain’s chief of research and economics Nicola Powell said the “rental pressure cooker” had not gone away, with strong population growth colliding with a slowdown in home building.

Dr Powell said more renters were finding themselves stuck in the rental market longer as buying a home remains out of reach.

“With a number of factors at play, there needs to be a seismic shift in supply to address the challenges being faced,” she said.

Everybody’s Home spokesperson Maiy Azize said renters were struggling and more and more were at risk of reaching an “affordability cliff”.

“Cutting back on meals, medicines and heating are becoming terrifying realities for many tenants as they try to keep up with eye-watering rents,” Ms Azize said.

She also said the housing crisis was also stopping people starting families and making other major life changes.

But the ultra-competitive rental market is showing early signs of losing steam, with vacancy rates ticking up from record lows.

Dr Powell said several factors could be driving up vacancy rates, including more flat-sharing and larger households, as well as more tenants opting for more affordable locations or property types.

But with rents still stubbornly high, housing affordability groups remain worried about the wellbeing of renters.

Ms Azize said limiting unfair rent hikes and building more affordable and social housing was the only way to end the crisis.