Be prepared: Your rent could skyrocket soon!

In Victoria, the move from investors to owner-occupiers at auctions has been notable. A staggering exodus of landlords from the rental market has reportedly seen a reduction of 20,000 homes over an 18-month period.

This decrease in available rental properties means more competition at every inspection. And as the laws of supply and demand dictate, this could inflate rental prices.

Jennifer Beveridge, CEO of Tenants Victoria, describes the reality of renters, saying, ‘We know that rents are too high for many households. We hear too often of people going without food, cooling, or back-to-school essentials just to pay the rent.’

With this, she advocates for a ‘fairness formula’ for rent increases ‘so that both renters and landlords can have clear expectations on what is going to be required of them.’

Among the factors that lead to fewer rental properties in Victoria are policy changes and economic factors, which influence landlords’ decisions.

The Reserve Bank of Australia’s official interest rate, sitting at a 13-year high of 4.35 per cent, has pushed some investors to the point of selling their properties.

Additionally, new minimum rental standards in Victoria, which come into effect in October and include requirements for heating, insulation, and draughtproofing, are prompting some landlords to exit the market rather than invest in upgrades.

Another factor reportedly contributing to the sell-off is the increase in land taxes.

Garry Salathiel, an investor with properties in Wangaratta, has experienced a dramatic hike in land tax, which he said has skyrocketed from $397 to $3,096 in just three years.

‘The $3,096 absolutely floored me. This is the last straw … I will have to sell something to live. So when I retire, something has got to go,’ he said.

While Victoria may be the state currently affected, other real estate experts think this trend could have national implications.

Marty Fox, founder of Whitefox Real Estate, warns that if investor confidence remains low, a rise in rental prices could be seen by the entire country.

‘This is basic supply and demand at work and Victoria is just the case study… The entire country could follow if the investor confidence remains as shaky as it is,’ he claimed.

However, not all experts agree on the trend’s immediate impact. Economist Shane Oliver suggests that the sale of investment properties to owner-occupiers or other investors may not directly affect the tenants in the short term.

‘Another investor or an owner-occupier will buy the property. Longer term, if investors continue to sell on a net basis, then it could drive up rents as there will be less rental properties available,’ he said.

Despite the concerning trends, there are reportedly signs of stabilisation in the Victorian rental market as vacancy rate increases have slowed.

Per recent data, rents increased by only 4.8 per cent over 2024 compared to an 8.1 per cent surge in 2023.

At YourLifeChoices, we are committed to keeping you updated on the latest developments in the housing market.

We invite you to share your rental stories and join the conversation. What are your thoughts on this potential rent hike? What strategies are you considering to manage this? Share your thoughts in the comments section below.

Also read: Top seven mistakes renters make

Floralyn Teodoro
Floralyn Teodoro
Floralyn covers different topics such as health, lifestyle, and home improvement, among many others. She is also passionate about travel and mindful living.

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