Rents in Australia are soaring at unprecedented levels and many are wondering just how much longer they can keep climbing.
SQM Research, a property data provider, has reported that, on average, the asking rents of capital cities have risen by 24.6% in the last 12 months, and rents on a national level have increased by 18%.
So why have rents been rising so rapidly? The most obvious reason is that there is a shortage of rental properties in many parts of Australia. This is due to a combination of factors, including a lower number of new dwellings being built and an increase in population, which has pushed the demand for rental properties higher.
At the same time, the cost of buying a property has also risen, making it more difficult for people to purchase their own homes. Many prospective buyers are turning to the rental market instead, further increasing demand and driving up prices.
The situation has been made worse because the rental market is largely unregulated, meaning that landlords are free to set whatever rent they want. This has led to some landlords taking advantage of the situation and pushing rents up to levels that are beyond the reach of many people.
Australia has seen some of the biggest rent increases in the world over the last 18 months. However, steep residential rent increases are not unique to Australia; throughout much of the developed world, rent prices have soared due to a combination of pandemic-induced demand and government stimulus.
Even though the economies of a multitude of countries across the developing world performed relatively strongly, pandemic-driven demand was not enough to cause outsized rent increases. It is worth noting, however, that this was the case.