The Australian dream of having a place to call home is becoming increasingly elusive for many, particularly for those who rent.
In an alarming trend, rental prices have surged once again, leaving millions of Aussie renters grappling with the financial strain.
The first quarter of 2025 has seen a significant jump in rent costs, with fresh figures from PropTrack revealing a 1.6 per cent increase, setting a new median price at a staggering $630.
For those living in the hustle and bustle of capital cities, the pinch is even sharper, with median rents climbing 1.5 per cent to $650.
Meanwhile, regional renters have experienced a relatively stable period, with weekly costs hovering around $550.
However, the stability in regional areas offers little comfort to the median renter now forking out an additional $1,560 annually compared to the previous year.
REA Group’s Senior Economist, Anne Flahert, provided insights into these troubling statistics, noting that the first quarter often sees the highest rental growth.
‘I think it’s very unlikely rents will get back to the rate of growth of 2022-2023 as that was pretty unprecedented,’ she says while also pointing out that the current uptick in rental prices is a cause for concern.
Flahert suggests that while moderating population growth could eventually ease rental market pressures, it might take a while until it ‘impacts the property market’ due to the long-term stay of recent arrivals, such as international students.
Contrary to popular belief, Flahert also clarifies that rental prices are not directly tied to interest rates. Instead, it’s the supply constraints and low vacancy rates that are driving rents higher.
‘We want to see a vacancy rate of a minimum of 2 per cent across most markets but unfortunately for a long time we have seen vacancy rates very low,’ she said.
Research based on ABS data from Money indicates that rent increases have reached their fastest since the recent global financial crisis.
Property expert Mansour Soltani from Money.com.au points out that while general inflation is easing, renters are being left behind.
Homeowners may soon enjoy rate cuts and lower mortgage repayments, but renters continue to bear the brunt of the housing crisis, with rent inflation outpacing the overall rate.
‘The general rate of inflation is easing and back within the RBA’s target range, which is good news for homeowners desperate for more rate relief,’ Soltani said.
Sydney remains the most expensive city for renters, with a weekly cost that is $70 higher than Perth, the second most expensive city.
In contrast, Melbourne has become more affordable. It now ranks as the second cheapest capital city for rent, only behind Hobart.
This shift is attributed to an increase in housing supply in Victoria, which has kept pace with population growth better than other states. However, with a slowdown in new home construction and a rise in population, this affordability may be short-lived.
The Victorian government has attempted to alleviate some of the pressure on tenants by implementing over 130 legislative changes to provide more protections.
Additionally, Premier Jacinta Allan’s government has introduced higher land taxes on investment or secondary properties valued at $50,000 or more. Despite these efforts, Melbourne’s rental market’s affordability is primarily due to supply rather than regulatory changes.
The recent lift in rental prices follows the Reserve Bank of Australia’s (RBA) decision to cut the official cash rate from 4.35 per cent to 4.10 per cent.
While the RBA left interest rates unchanged at 4.1 per cent in its latest meeting, Treasurer Jim Chalmers has urged landlords to consider the rate cut when setting rents. The government is providing rent assistance and other cost-of-living support to acknowledge the hardships faced by renters.
As we navigate these challenging times, it’s clear that the rental market is a complex and multifaceted issue. For our readers who may be on fixed incomes or considering downsizing, the rising rental costs can be particularly daunting.
It’s essential to stay informed about your rights as a tenant and to explore all available government assistance. If you’re feeling the squeeze of the rental market, share your experiences with us. How are you coping with the rising costs, and what strategies have you found helpful? Your insights could provide valuable support to fellow Australians facing similar challenges.
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