Homeowners have had three months of consecutive rate hikes and now a panel of economists expects inflation to reach 7.1% before the end of the year.
The cost of living is increasing and with homeowners paying more for their properties, renters are expected to be hit hard.
Rents in every state and territory have already increased double figures over the last 12 months. House rents in Brisbane increased 16.9 per cent, followed by Sydney at 12.7 per cent and Adelaide at 11.6 per cent.
Units in Brisbane also rose 12.5 per cent, Sydney at 11.7 per cent and Hobart 11.1 per cent according to figures from Domain’s quarterly rent report.
Overall the median house price rise across all state and territory capitals was 12 per cent whereas units jumped 12.2 per cent.
The rental hikes can be attributed to lower vacancy rates, which reached a record low in May.
Domain’s chief of research and economics Dr Nicola Powell told the Australian Financial Review: “The continued recovery and resurgence of the rental market sees demand exceeding supply two years from the onset of the pandemic, resulting in the overall decline seen in 2022.
“The current conditions bolster the likelihood of future rent increases and could see lower vacancy rates remain in coming months.”
Rental stock is currently sitting at 19,715 across all capital cities, which is a decline of 5.4 per cent.
Darwin experienced the sharpest decline, with a drop of 10.1 per cent to just 98 listings. Melbourne went down 8.5 per cent to 8,244 listings.
Brisbane’s vacancy rate decreased by 4.8 per cent to 1,582 listings, Perth saw a drop of 4.1 per cent to 1,086. Sydney’s rental listings remained fairly stable, however declined 3.3 per cent o 7,978.
Hobart, ACT and Adelaide all experienced jumps in vacancy rates on the previous month. Adelaide had the sharpest rise of 13.3 per cent to 349, ACT was up 5.8 per cent to 290 and Hobart 1.1 per cent to 88 properties available.
Year on year though, Melbourne had the sharpest decline at 53.8 per cent.
Adelaide’s properties decreased by 49.5 per cent, Brisbane, 47.4 per cent, Sydney by 46.3 per cent, Perth by 21.9 per cent, ACT by 7.3 per cent and Hobart by 5.4 per cent.
Darwin bucked the trend and vacancies were up 21.0 per cent.
The low vacancy rates and the cost of living crisis have led to Aussie renters struggling to pay their rent, with 40 per cent expressing difficulties. That is up from 32 per cent 12 months earlier based on statistics from Finder.
Alarmingly, 53 per cent of renters in Finder’s June RBA Cash Rate Survey expected their rents to increase in the next 12 months. That includes 27 per cent who think rents will increase 9 per cent and 27 per cent who think they will go up more than 9 per cent.
Finder senior money editor, Sarah Megginson says: “The spike in rental costs is putting a lot of pressure on tenants and it’s leaving them with very little left over money for other necessities.
“Once they pay the rent, they have to budget for price hikes at the supermarket, petrol, energy prices, even public transport – life is getting very hard to afford.”
She says that due to low vacancy rates prospective tenants are doing what they can to secure a property and that the market had become cutthroat.
“Applicants are offering literally hundreds of dollars more per week than the asking price just so they have somewhere to live – it’s so disheartening.
“Others are being forced to move in with family or friends just to keep a roof over their heads.”
Ms Megginson adds that she knows that some people are still recovering from disruptions caused by the pandemic and can’t afford added pressure on their already tight pay cheques.
She recommends: “If you can’t afford your rent, reach out to your property manager and see if you can come to an agreement with your landlord.
“Those currently in a house could consider downsizing to a townhouse or unit as rent increases for apartments have not been as steep.
She suggests slashing all unnecessary expenses and doing an emergency audit of all utilities to see where you can save money on things like energy bills and insurance.
Megginson warns that: “These added rental costs could displace a number of vulnerable people and with inflation expected to keep rising rental increases are not likely to go away anytime soon.”
Financial Counselling Australia CEO, Fiona Guthrie said: “Rents have increased 12 per cent and we have had an increase in calls over the last few months.”
She said: “It’s a really common problem and it’s become more difficult. I think what’s happening in the broader economy is that the people who are doing it most tough are receiving government support payments and rents are going up, food, petrol and everything is very hard to cut back on.”
Anglicare’s Rental Affordability Snapshot National Report says that someone on a Jobseeker payment will not be able to afford any properties. Someone on a Parenting Payment Single or the Disability Support Pension would find 99.9 per cent of rentals affordable. A retiree living on the Age Pension fares slightly better with 99.3 per cent of properties unaffordable.
Anglicare’s report says that the minimum wage has not kept up and a single parent working full time on the minimum wage could only afford 0.7 per cent of rental listings.
Dr Powell says that household formation leads to low vacancy rates and pushes prices up.
“We need more homes because there are fewer people living in them.”
That’s according to data from the federal government housing agency NHFIC which said earlier this year that single-person households jumped by 35,000.
The Queensland state government has planned to add an extra 6,365 dwellings to its existing social housing stock, which a report from the Queensland Audit Office says will not be enough because of demand and a tightening rental market.
Meanwhile, the NSW Department of Planning expects 143,400 to 161,300 new houses to be built over the next five years. The housing supply will be spread across the five Sydney stricts – CBD, Western City, Eastern City, North and South.
Anglicare’s report calls in state governments to invest in social and affordable housing and says that the shortfall is massive. The report says: “Research conducted at the City Futures Research Centre at UNSW estimates the current unmet need for social housing targeted at households on the lowest incomes at 437,600.
“Anglicare Australia supports the call from the Everybody’s Home campaign to build an additional 25,000 social housing dwellings per year.”
Anglicare also wants unfair rent increases to end. The report says: “Depending on which state or territory they live in, renters are afforded very different levels and types of protections.”
The report adds: “There have been significant reforms in Victoria and the ACT banning “no cause evictions”, limiting the amount and regularity of rental increases and requiring rental properties to meet minimum standards.”
Ms Megginson says that she knows of one landlord on the Gold Coast whose tenant moved a few months ago because the landlord was going to increase the rent by $300 a week – over $15,000 a year.
The NSW Fair Trading website says: “For agreements with a fixed term of 2 years or more, the rent can only be increased once in a 12-month period. A landlord must also give the tenant at least 60 days’ written notice.”
For periodic agreements: “The landlord must also give the tenant at least 60 days written notice before the increase starts.”
And when there is no written agreement: “For a tenancy without a written agreement, a landlord cannot increase the rent during the first six months.”
The Fair Trading website does not specify any amounts so in theory, a landlord can increase the rent by whatever amount they think is fair. If you are not happy with the increase you can negotiate with your landlord or apply to the tribunal for a ruling. This must be done within 30 days of receiving notice that the rent will increase.
If you’re finding it difficult to pay your rent and are at risk of homelessness you can call the Homelessness Hotline on 1800 474 753 or the National Debt Helpline on 1800 007 007.