‘A social calamity’: record-high rents push tenants across Australia to breaking point

Sep 2022Karen Millers

Interest rate hikes and lack of supply across Australian cities are leaving tenants exposed to ballooning rents and evictions.

David* and his partner had been living in their inner-Sydney property for only 12 months when they were issued with a 50% rent increase. They had been paying $800 a week for a three-bedroom home with a study, one car space and no facilities. Now, they were told, it would jump to $1,200.

“Their justification was it’s in line with market value,” David says. “We said we’d be prepared to pay $1,000 a week, even though the air conditioning hasn’t worked.”

The same week, they were served with a lease termination notice instructing them they had 30 days to vacate the property.

“We’ve negotiated in good faith but they just want to kick the can down the road,” David says. “I don’t think either of us have slept properly for the last week. It’s really heartbreaking.”

Tenants across Australia are being issued with steep price rises and eviction notices in major capital cities as rental prices reach record highs.

Sydney has been the hardest hit, with weekly rents climbing by 23.7% in the past 12 months and 4.21% in the past week alone. The median combined cost for units and houses is now $666.41 a week, the latest SQM Research Weekly Rents Index data shows.

In the CBD, the situation is even more dire. The median price for a unit has risen to $847.52 a week – a 30.1% increase from 12 months ago. House renntal prices have risen by 44.4% in the same period, sitting at a median of $1,273.67 a week.

Brisbane rents have risen by 22.2% in the past 12 months, averaging $557.77 a week, followed by Melbourne (19.3%), Adelaide (18.6%) and Perth (15.6%).

Median rents in Australian capital cities. Source: SQM Research.

Samantha, who asked that her surname not be used, was surprised by a $60 a week rent increase last week when she received a lease renewal agreement for the home she shares with her partner in Springfields Lake, 25 minutes from central Brisbane. It represents a 12.5% increase. The couple have lived at the property for just under a year.

“I’m a high school teacher. I only make two grand a fortnight. It’s a quarter of my wage gone,” she says.

They tried to negotiate it down to a $50 increase, provided the real estate looked at a drainage problem in the back yard, and were told to vacate within 60 days.

“I asked them for reasoning and they said the owners don’t have to provide a reason,” she says.

“We were told they wanted long-term tenants and obviously that’s not true. How are you supposed to save for a mortgage when we’re paying more than double [what mortgage repayments would be] a week in rent?”

‘Shock waves through the community’

Kate Colvin, the national spokesperson for the Everybody’s Home campaign, a national coalition of housing and homelessness organisations, says landlords have passed interest rate rises on to their tenants.

“Renters on modest incomes are bearing the cost of the national inflation challenge,” she says. “This is both unfair and unwise. We need to urgently expand social and affordable housing.”

Analysis of rental vacancy rates by Everybody’s Home found asking rents in Sydney had surged by up to $100 a week in the past three months, while vacancies are at historic lows.

The national rental vacancy rate fell to 0.9% in August, according to property analysts SQM Research, the lowest it’s been since 2006.

In south-western Sydney – where the vacancy rate is 0.7% – rents increased by 9.3% over the past quarter.

Western Sydney climbed by 10%, while Liverpool had climbed by 10.1% and the lower north shore by 14.3% – the equivalent of $107 a week.

“The rental crisis is sending shock waves through the community, with renters hit with massive hikes having to cut back on [essentials],” Colvin says.

“This is a social calamity and an economic disaster, with the double whammy of record low vacancies and skyrocketing rents making it impossible to find an alternative, more affordable home.”

The Queensland government announced on Friday it was freeing up granny flats to rent privately for the next three years under “emergency planning changes” to address the state’s housing crisis.

A survey conducted by Property Investment Professionals of Australia found the Queensland rental supply had plummeted by up to 30% in the past two years as more than 160,000 investment properties were sold to homebuyers.

The state’s planning minister, Steven Miles, has said people can be moved into secondary homes “much more quickly” than constructing new housing for renters.

Brisbane renter Kelly Byrne just had her rent increased by $150 to $700.

“Our garage roof half fell down inside, most of the down lights have never worked,” she says. “The air conditioning took nearly two years to fix and only for downstairs, not upstairs. As soon as the garage repair was done, they increased [the rent].”

The acting chief executive of the Australian Council of Social Service, = Edwina MacDonald, says it’s “extremely tough” for people to find rentals in the current market, particularly for those on the lowest incomes.

“People on income support payments … are left in the near impossible situation of trying to find an affordable home in the private rental market,” MacDonald says.

“We’ve seen double-digit rent increases and interest rate rises that put further upward pressure on rents.

“The federal government must lift income support payments as well as commonwealth rent assistance to relieve the financial stress people in the private rental market are under.”

The Real Estate Institute of New South Wales CEO, Tim McKibbin, says the rental market is in a “state of turmoil” due to insufficient supply.

“People have turned up to an open rental, the agent might be offering it at $500 and they walk over and say, ‘I’ll pay 700’ because they’ve missed out on the last five properties and they need somewhere to live,” he says. “Housing is not a discretionary thing.”

*Name has been changed

Originally Published: Caitlin Cassidy | The Guardian | 27 September 2022

https://www.theguardian.com/australia-news/2022/sep/27/a-social-calamity-record-high-rents-push-tenants-to-breaking-point

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