We know there is a rental crisis around Australia at present, and there doesn't seem to be any easy answers to resolve it.
In a national survey by Rent.com.au, over half (55%) of Australian renters express a sense of neglect from the 2023-24 Federal budget, indicating that their concerns have not been adequately addressed.
Additionally, an additional quarter (25%) acknowledges that while the measures presented are a step towards tackling the ongoing rental crisis, they believe that they fall short of providing a comprehensive solution.
Upon closer examination of the findings, it is intriguing that Gen Z renters exhibited the lowest level of awareness regarding the budget release.
Around 50% of individuals from this generation strongly believed that the government's initiatives provided no benefits for renters, aligning with the sentiments expressed by Baby Boomers.
When considering all age groups, Gen X renters displayed the highest level of agreement with this perspective, with 59% expressing their concurrence.
The survey further unveiled that Baby Boomers were most inclined to view the increment in rent assistance caps as a positive step, considering it a modest yet significant initial measure.
Initiatives in this year's budget included a raise in the rent assistance cap, an increase in the supply of social and affordable housing, tax incentives to promote build-to-rent, and an expansion of the Home Guarantee Scheme to permit joint applications from friends and family.
Mr Greg Bader, Rent.com.au's CEO commented:
"We appreciate the government’s efforts to address the rental crisis by providing additional relief to low-income households – it’s a good start.
But we have over 32% of our population renting and as you can see from the data, most have experienced a 25-30% increase in renting costs over the last two years.
This is largely driven by some of the lowest vacancy rates our market has ever seen, so availability and cost are significant challenges for most renters, not just low-income earners.
We know it’s not an easy fix and there is a level of causality in needing immigration to address staff shortages that will allow more housing to be built.
The budget allocation for more social and affordable housing and further encouraging build-to-rent are all positives – I guess the feedback we are getting is that these measures feel a long way off, people are seeking support now.”
According to the data gathered by Rent.com.au, rental prices in the four major capitals of Australia have surged by as much as 35% over the past two years.
This steep increase has left numerous residents grappling with financial difficulties, making it increasingly difficult for them to meet their bills and secure affordable housing.
Given the persistently high rental prices and the recent rise in the cash rate, the challenges faced by renters in Australia have reached unprecedented levels.
Analyzing the shifts in median rental prices reveals significant rent hikes in Australia's major cities over the past two years.
Among them, Sydney stands out with the most substantial surge in rents for both houses and apartments, witnessing a remarkable increase of 30% and 35%, respectively, during the last 24 months.
Melbourne's apartment market has also experienced the impact of these rising prices, while Brisbane and Perth have witnessed significant growth in rents for both property types.
This data serves as one of several indicators highlighting the escalating cost of renting and the genuine affordability concerns faced by tenants in today's market.
While the Australian residential rental market has seen a significant increase in rents in recent years and this might seem like a boon for landlords, it has also been accompanied by a range of challenges that have put considerable pressure on their financial returns and operational capabilities.
These challenges include rising mortgage costs, increasing land taxes, higher insurance costs, increased compliance costs, and growing government interference.
These rising cost have become a financial burden that can make it difficult for landlords to justify investing in property improvements, which again can impact the quality of living for tenants.
Insurance costs for landlords have also risen in response to natural disasters and an increasingly litigious society. Insurance providers have increased premiums to offset the risk of property damage and liability claims, making it more expensive for landlords to adequately insure their properties.
At the same time compliance costs have surged as local governments introduce new regulations to ensure the safety and wellbeing of tenants.
These regulations often require landlords to invest in expensive upgrades or regular maintenance, such as ensuring that properties meet energy efficiency standards, have functioning smoke alarms, and are free from hazards like asbestos. Such compliance measures are necessary for the protection of tenants, but the increased costs can be a burden for landlords.
Lastly, there is growing government interference in the Australian residential rental market.
In an effort to protect tenants and improve housing affordability, governments at all levels have considered considering such as rent controls, eviction moratoriums, and increased tenant protections.
While these initiatives are important in addressing social issues, they can create additional challenges for landlords, who must navigate a complex regulatory environment and sometimes face diminished returns on their investments.
In conclusion, despite rising rents in the Australian residential rental market, landlords face several significant challenges that impact their bottom line and the quality of their properties.