Unexpectedly strong rental growth has pushed up the forecast rental growth for 2022 and 2023, and high rent levels are now expected to last until 2025.
This week, the third State of the Nation’s Housing 2022-23 study report from the National Housing Finance and Investment Corporation (NHFIC) was released. In it, this result was found.
The study looked at the rental market in Australia and found that the cost of renting was very different in the city and in the country.
Cities and areas that are different
Even though rents have gone up everywhere, the changes vary from city to city and area to region. During the pandemic, it became much harder for people in rural areas and smaller cities to pay to rent.
For example, from the start of the COVID-19 pandemic in early 2020 until January 2023, rent prices in several outer Local Government Areas (LGAs) in Sydney went up by more than 30%. More than three times as many people moved into these outer LGAs as moved into some LGAs in the middle of Sydney.
The trend of people leaving cities and moving to the countryside helped the areas grow.
More lately, the situation has changed. Rent growth is going down in more rural areas, while rent growth is going up in some big cities.
These results show that the premium that comes with living in big cities close to job centres may be coming back.
Tenancy market pressures
Nathan Dal Bon, the CEO of the NHFIC, says that the research shows that it will be hard to find affordable housing for a while.
“The outlook for being able to afford things will stay tough, but not always bad. As immigration rises, it’s possible that the cost of renting will go up in many cities in the near future.
The increased pressure on rentals is expected to hurt renters in Sydney and Melbourne more than renters in other cities.
The rental market is already tight, but it is getting worse because people are moving back from other countries quickly and building costs and interest rates are going up a lot.