Australia’s rental market is experiencing rapid growth, with rents rising significantly over the past two years. This trend shows no sign of slowing down, leaving renters bracing for further financial strain.
Recent data reveals a stark increase in Australian rents, highlighting an ongoing crisis that is pushing housing affordability to new lows. According to Money.com, rents have surged by 14.2% over the past two years, a jump far exceeding the country’s overall inflation rate of 6.6%.
These price increases come at a time when rental vacancies are at historically low levels, exacerbating the housing crisis for Australians.
A Surge in Rent Prices
The spike in rent prices is not a recent phenomenon but the result of sustained upward pressure in the housing market. In 2023, rents rose by 7.3%, followed by a 6.4% increase in 2024. This consecutive growth mirrors the period during the Global Financial Crisis (GFC) when Australia saw similar rent increases, with the highest jump recorded at 8.4% in 2008.
According to Mansour Soltani, a Property Expert at Money.com, the current situation reflects a troubling trend. He notes that, just as during the GFC, rent rises are outpacing general inflation and could persist for several more years.
The challenge for many renters lies in the growing disparity between them and homeowners. While the latter are poised to benefit from potential interest rate cuts, renters face continued financial challenges as rental prices climb steadily. This divide is intensifying the housing affordability crisis, with renters feeling increasingly squeezed by rising costs.
Migration, Vacancy Rates, and the Rental Bottleneck
A critical factor behind the growing rent prices is the surge in net overseas migration following the pandemic. As international migration to Australia continues to rise, demand for housing has surged, further tightening rental supply.
According to Money.com, low vacancy rates in capital cities are directly tied to this influx of migrants. This has led to increased competition for rental properties, pushing prices even higher.
While some have suggested that cutting immigration could help alleviate the rental crisis, others argue that the root cause lies in the chronic under-supply of housing. With limited new apartment construction and a growing population, the supply of rental properties is not keeping pace with demand.
