1. Australia’s rental crisis is worsening due to high population demand from net overseas migration, leading to a scarcity of available rentals.
2. The rental vacancy rate hit a fresh all-time low of just 1.02% at both the national and capital city level, with Melbourne and Sydney experiencing the sharpest declines.
3. Forward-looking indicators of housing supply, such as housing approvals and new home sales, are at decade lows, suggesting that the rental crisis will continue.
4. With Australia’s population growing by more than 600,000 people per year, driven by net overseas migration of around 500,000 people per year, the rental crisis will likely worsen.
5. This prolonged period of high demand and low supply will result in financial difficulties for Australian renters, potentially leading to more people resorting to group housing or homelessness.
Navigating the Deepening Rental Market Dilemma
Australia’s rental market is experiencing a recurring and intensifying crisis, akin to a “Groundhog Day” scenario for renters. Each month, the situation worsens as the gap between population demand and housing supply widens. This crisis is primarily driven by the Albanese government’s unprecedented levels of net overseas migration, which are outpacing the nation’s housing supply capabilities.
Key Findings from PropTrack’s Rental Vacancy Data
- Record-Low Vacancy Rates: According to PropTrack’s rental vacancy data for October, the vacancy rate has hit an all-time low of just 1.02% at both the combined capital city and national levels. This tightening of vacancy rates is evident across the country, with the exception of the Northern Territory.
- Sharp Declines in Available Rentals: Major cities like Melbourne and Sydney, which account for a significant portion of Australia’s net overseas migration, have experienced the most substantial drops in available rentals. Over the past 12 months, vacancy rates in Melbourne and Sydney have decreased by 0.55% and 0.35%, respectively.
- No Relief in Sight for Renters: The national vacancy rate has been on a downward trend for over three years, a situation that is likely to persist due to strong population growth and a slowdown in new housing supply. Indicators such as housing approvals, housing starts, and new home sales are near decade lows. For instance, only 164,000 homes were approved for construction in the year to September 2023.
The Impact of Population Growth and Housing Supply Shortage
With Australia’s population growing by more than 600,000 people annually, driven largely by a record net overseas migration of around 500,000 per year, the rental crisis is set to intensify. This imbalance between population growth and housing supply is creating a prolonged period of financial strain for Australian renters. The consequences include more people resorting to group housing or facing homelessness.
Conclusion: Addressing the Rental Market Challenges
The persistent rental crisis in Australia calls for urgent and effective solutions. Addressing the imbalance between population growth and housing supply is crucial to alleviate the financial burden on renters and prevent further escalation of the crisis. This situation underscores the need for comprehensive policy measures and strategic planning to ensure a stable and accessible rental market for all Australians.