The Soaring Cost of Rental Prices

Australia’s property market is on fire, which is great for landlords but tough for renters. Rentals are in short supply, and the prices for those available are often through the roof.

We’ve all heard the stories of people pouncing on units or houses as they become available and bidding wars ensuing where the asking price is a mere starting point for negotiations.

The stress of obtaining housing and hanging onto it once the lease has been signed is very real for Aussie renters. In addition, the economic effects of the Covid-19 pandemic and lockdowns continue to linger as well.

A renter has many costs to consider in addition to the actual rent, including the rental application, rental bond, upfront payment, utility, and removal costs.

This article will discuss the current state of the rental market, the rental stress this has caused renters, and possible options to help renters in this climate.

Rental Crisis

Rental prices have gone up almost 20 percent in Australia’s regional centers over the last two years.

A recent report from the Australian Council of Social Service (ACOSS) and UNSW Sydney showed that regional rents were now 18 percent higher than before the Covid pandemic. At the same time, wages in the same period had only grown by 6 percent.

Rental Stress

The raging rental market has left many Aussies on the brink financially, resulting in what is known as rental stress. According to the

 Australian Government, rental stress occurs when tenants spend more than 30 percent of their gross income on rent.

According to the Australian Bureau of Statistics, as of August 2021, the median weekly earnings of employees in Australia was $1, 200.

Using the government’s 30% percent formula, any single-income household paying more than $360 per week in rent would be considered to be under stress. The median unit rental is above $360 Australia-wide - except for South Australia, which is a huge problem.

Increase in Rentals

According to the Australian government, more people are renting and are doing so for longer periods. The government cited the following reasons for this increase:

People rented for longer periods before having children.

An increase in international students and migrants.

Fewer people are going from renting to homeownership, especially younger people.

Renters in a Post-Covid Economy

Not surprisingly, a report done in the middle of 2020 revealed that the Covid pandemic had a

significant impact on Australian renters. Some stark findings from the report included:

  • Around 63% of renters had changes to their employment conditions, including reduced hours and income, reduced income, and temporary lay-offs.
  • Around one-third endured worsening in their living circumstances, including difficulty paying rent or bills.
  • About 25% of renters said they skipped meals to save money.
  • Over 5% said that they had received an eviction notice.
  • Around 17% reported that their rent had become unaffordable.

There is Help for Renters

Yes, the rental market is ablaze and doesn’t slow down anytime soon. But that doesn’t mean that all hope is lost. Renters may have to get creative. They could take on a second job or negotiate the rent with their landlord.

In really dire situations, a loan can help with the upfront rental payment, the bond or deposit, rental application fee, utilities, and removalist costs.

If you want to learn about personal loans and would like to apply right away, contact Credit24, a global market-leading provider of personal finance.

IPF Digital Australia Pty Ltd, trading as Credit24, ABN 59 130 894 405. Australian Credit Licence 422839. The information in this article is of general nature and does not take into consideration your objectives, financial situation or needs. Lending criteria, fees, and charges apply. For more information about our products, eligibility criteria, and terms and conditions, please visit https://www.credit24.com.au/.

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