Rental prices are facing the strongest annual growth since 2009, according to data released by the Australian Bureau of Statistics (ABS).
The Consumer Price Index (CPI) for the March 2024 quarter revealed rental prices rose 7.8 per cent annually, reflecting low vacancy rates and a tight rental market.
Wollongong resident Sage McAteer said that renting in Sydney would allow him to live closer to university. He said that moving to Sydney would save him two hours of travel time a day. However, despite multiple attempts, the rental market is too competitive, and too expensive to break into.
“I’ve gone through multiple phases of attempting to find a share house.
“But now, I’ve given up.”
“The rent prices and lack of housing availability whilst being a full-time student hasn’t given me much choice but to remain in my family home.”
Rental prices are unlikely to decrease soon. In a Monetary Policy Decision earlier this week, the Reserve Bank of Australia (RBA) decided to leave the cash rate target unchanged at 4.35 per cent.
RBA Governor Michelle Bulock said the rise in interest rates is required to bring inflation down
“We believe we have rates at the right level to return inflation to the target range next year, but as we’ve said in the past, getting inflation back to target will take time.
“And I think the path will likely continue to be bumpy and we should all be prepared for that.”
The unchanged cash rate maintains high interest on loans and mortgage payments for property investors.
The value of investor loans rose 3.8 per cent in March to $10.2 billion, increasing 31.1 per cent annually.
Mish Tan, the Head of Finance Statistics at the ABS, said since March 2023 there has been relatively strong growth in investor loans, with increases in both the number, by around 11 per cent, and the average loan size, up by around 8 per cent.
“This aligns with historically low vacancy rates over the same period, and CPI rental prices rising 7.8 per cent annually to March quarter 2024.”
The rate of growth in rental prices is moderated by the Commonwealth Rent Assistance (CRA).
Due to the biannual indexation last September, significant changes were made to the CRA when the maximum available rate increased by 15 per cent.
These changes decreased the rental price growth by 1.7 per cent over the 12 months to the March 2024 quarter.
However, the combination of a high cash rate, low vacancy rates, and rising rental demand, is resulting in a competitive rental market, leaving investment property owners to raise the price.
