Rents have soared due to a record number of rental units available in a “crisis” that analysts say is set to worsen.
- Combined rents for houses and apartments rose 11.8% in capitals in 12 months
- The national rental vacancy rate is 1%
- Melbourne and Sydney have the highest percentage of suburbs with falling home purchase prices
Rents in the capital jumped 11.8% in one year, after rising 2.2% in the month to April 12, according to SQM Research.
Rents for houses in the capital have jumped 14.7% in one year, while unit rents have increased by 11.2%.
“The reality on the ground will be that many families, many young people will not be able to find the housing they really need,” said Louis Christopher, chief executive of SQM Research.
A return to the city in the country’s largest capitals drives up the cost of rent. Housing rents in the Sydney CBD have risen 5.5% over the past 30 days and 7.4% in the Melbourne CBD.
The two areas were among those that saw rents fall the most when COVID-19 halted migration to Australia.
However, Brisbane recorded the highest annual rise in combined house and unit rent, up 15.2%.
The sharp increase in rents is driven by the low number of rental units available.
“We have a real problem on our hands,” Mr Christopher said.
National rental vacancy rates fell to 1% in March from 1.2% in February.
“This represents half the total number of vacancies reported 12 months ago and the lowest vacancy rate since 2006,” Mr Christopher said.
“And recent monthly data suggests that we are still not at the worst point of the crisis. We thought that at least regional Australia may have started to get some relief as people return to cities. But that hasn’t happened yet.”
Mr Christopher said many towns and cities had near-zero rental vacancy rates.
“Obviously, we are not going to solve this problem overnight, but I hope that the various state and territory governments will increase their rental assistance programs in order to cushion the rental housing emergency. that we have here and now.”
Property prices fall but buyer interest remains high
Rents are rising at the same time house prices are falling in much of the country.
The percentage of suburbs with falling house prices in the March quarter was 46.8% in Melbourne, 38.6% in Sydney, 10.9% in Hobart, 13.4% in Perth and 18% in Darwin, according to CoreLogic.
The housing market remained strong in Adelaide and Brisbane, with no suburbs in these cities seeing a drop in house prices.
Quarterly figures from CoreLogic showed that the national value of homes rose 2.4%, which is lower than the 5.8% recorded during the same period in 2021.
CoreLogic’s head of research, Eliza Owen, said the quarterly figures confirmed a shift from an extended period of broad-based growth to a multi-speed market that differed across capitals, regions and property types.
“Slightly tighter lending terms and higher average fixed rates are likely to hit the top of the housing markets first,” Ms Owen said.
The Melbourne suburb with the biggest fall in value was Cremorne, down 6.4%. In Sydney, the steepest decline was 5% in Beaconsfield.
Mixed real estate interests
Nationally, monthly online property search volumes fell 8% in March and 11% from March 2021, according to REA Group’s April 2022 Housing Market Indicators PropTrack report. .
On a monthly basis, search volumes declined in each state in varying ways, the report notes.
Views per ad fell 1.2% in March. However, nationally, the number of views per ad was 24.3% higher than the same period last year.
Monthly views per listing were strongest for properties in Melbourne and Adelaide, up 3.2% and 2.9% respectively.
Some buyers seem to have accepted that they will have to pay more for the properties.
In the capitals combined, 50.1% of searches in March were for properties listed for more than $1 million. A year ago, this share was 42.3%
Inquiries from first-time home buyers in March were 8.8% higher than a year ago, but fell 36.3% from the peak recorded in September 2021.
PropTrack senior economist Eleanor Creagh said buyer demand continued to moderate as more sellers listed their properties ahead of the election and rising rates.
“Sales volumes remain strong, so far tracking the start of 2021 almost unchanged,” Ms Creagh said.
Rising interest rates cool the real estate market
Reserve Bank modeling estimates that house prices could fall by 15% if interest rates rise by 2 percentage points.
Banks are already gearing up to raise mortgage rates ahead of the Reserve Bank of Australia’s planned rate hike in June.
The Big Four Banks’ average 3-year fixed rate for homeowners rose 2.02% year-on-year, according to RateCity.
“This is the fourth time the CBA has raised its fixed rates this year,” said Sally Tindall, research director at RateCity.
Australia’s largest bank, CBA, raised fixed rates this week by up to 0.50 percentage points for homeowners paying principal and interest, and up to 0.90 percentage points for some investors.