Tenants feel ‘rental anxiety’ as Melbourne rents hit record high
By Jim Malo
Melbourne house rents have hit another record high in June, putting more pressure on already stretched tenants in the cost-of-living crisis.
The median asking rent for houses rose 11.5 per cent over the 12 months to June to $580, on Domain data, and units rose 10 per cent to $550.
Quarterly growth has slowed; house rents increased just 1.8 per cent over the quarter and unit rents didn’t move at all. Economists warned that the rental crisis was far from over, though, as few new rentals were coming onto the market.
Domain chief of research and economics Dr Nicola Powell said it was too soon to say if the crisis was abating.
“This is the complexity we’re under. We still have record rents across our cities,” she said.
“We know this crisis is not going to be solved in months, it’s going to take a long while for the tide to really shift.
“What we’re seeing now is change is happening, and we’re moving away from the extreme conditions we’ve seen.”
Powell said the low growth over the June quarter could be because of the rental market’s normal seasonality, and noted the vacancy rate was still unhealthily low at 1.2 per cent.
“You still have a landlord’s market, and to balance out Melbourne’s market you need between 5000 rentals and 11,000 rentals [extra].”
It was also possible tenants were unable to afford further rent rises, despite still having to compete for few available properties, Powell said.
“What you’ll find is those [landlords] who aren’t matching the market rate won’t get [their rental] filled and it will stay on the market longer,” she said. “That’s the difference. What can the market pay? And I think that’s what we’ve seen shift. Rents have far outpaced wage growth and we have a cost-of-living crisis.”
CBA chief economist Gareth Aird agreed tenants had reached a limit of what they could pay in rent.
“Rents are already so elevated and you have inflation rising much faster than wages. Non-discretionary inflation is really high,” he said. “It’s just limiting the amount of money people have that they can use as rent. If that hits a ceiling, then it makes it harder for landlords to keep increasing.”
Aird said rents could climb again in 2024. “The growth in the population will be much stronger than growth in dwelling supply which will still support growth in rents.”
The expensive and tight rental market was affecting the lives of tenants, lifelong renter Judy Steel said.
A life spent in homes that were never truly hers has given renter Judy Steel “rental anxiety”.Credit: Simon Schluter
Rising rents and a tight local market in the wake of the Maribyrnong floods pushed Steel out of the suburb and further out of the city.
“I’m in my early 50s,” she said. “I’m going to have to keep doing this. I’m going to get less for my money, it’s going to get more expensive. I don’t know where I’m going to end up.”
A life spent in homes that were never truly hers had given her “rental anxiety”, she said.
“In some respects I don’t even fully unpack. I just leave things in storage boxes, you end up being selective on what furniture you purchase,” Steel said.
“Will the new room be big enough for a king bed? Will the refrigerator fit?
“You have to make lifestyle decisions based on ‘What if?’ And the what if has occurred to me so many times, it’s a part of my life.
“That’s where the anxiety comes from. And I have been burned. It doesn’t matter how good of a tenant I am.”
Renters and Housing Union secretary Harry Millward said it was positive that rental growth appeared to be easing over the June quarter, but was still concerned about conditions for tenants.
“Obviously the market has been red-hot for ages but at this point … what we want to see is rents going backwards, rents getting lower,” he said. “I’m not sure I see a bright future from just three months of a slow market after so many months of extreme rises.”
Millward said that waiting for the market to right itself would leave tenants exposed to mistreatment from landlords and agencies, and called for the State Government to better enforce protections in the Residential Tenancies Act.
The Allan government in March introduced a $4 million renting taskforce, which aimed to take action against landlords who rent out properties that don’t meet minimum standards or don’t lodge bonds, among other things.
“There needs to be regulation on how much rent can increase, there needs to be an increased share of non-market housing,” Millward said. “But if we’re looking for the first, fastest step that will make the biggest difference the fastest, the enforcement of the rules on the books would be that.”