Aussie renters feeling the effect of rising interest rates

Renters across Australia have seen everything increase in cost, including their rent.

According to CoreLogic, rental prices have risen by 9.8% in the last12 months, with the majority coming from capital cities. 

The current problem renters in Australia face is a lack of available vacancies, says CoreLogic’s research director Tim Lawless.

“The number of rental listings available nationally has dropped by a third compared to the five-year average, with no signs of a lift in rental supply. On top of already tight rental supply, it’s likely demand will continue to increase as overseas arrival numbers climb,” he says.

Currently, renters live in a ‘landlord’s market’ due to the low supply of vacant rental listings. The June 2022 Domain Rental Vacancy Rate Report says that vacancy rates have decreased nationwide in the last year, with Melbourne and Sydney feeling the brunt of rental vacancies. This means there’s a high demand for rental properties, but the supply can’t meet it. 

Hence, the increases in rent prices nationwide.

Another Domain report says the current rental median price is $515. Last year, the median rental price was $460–a $55 increase! It’s the fastest price jump since 2014, according to recent Australian Bureau of Statistics data. 

The increases could be partially blamed on the latest RBA cash rate increases, where many investors might have passed the extra cost of having a home loan on to their tenants. Another factor to consider is the growing cost of living, where almost everything is becoming more expensive. There have been few exceptions. 

University of Sydney associate professor from the school of economics, Stella Haungfu attributes higher borrowing costs and tightened lending conditions to the diminishing rental market. 

“It’s harder and harder for would-be-first-home buyers to obtain a housing loan. As a result, they will jump back in the rental queue rather than buying a property. This effect will further increase the demand pressure in the rental market,” she says.

How to deal with higher rent

If you’re not financially ready to enter the property market, it is essential to know your tenant rights. 

For starters, your landlord can’t suddenly change your rent during your lease. 

States require landlords to give several days notice on potential rent increases. If you find a hike excessive, you may even try to dispute it. 

If you’re in a situation where your landlord wants to increase your rent, consider negotiating the price. You can haggle with the promise of signing a longer term lease in exchange for a lower rent. 

Remember that landlords want to make money, and having a place empty will be a loss. It’s in their best interest to have a tenant at all times. Use that to your advantage.

How to become a homeowner

With rent prices predicted to continue rising, it might be time to find a forever home. To get started on your home buying journey, read Mozo’s home loan guides and tips. 

Alternatively, start comparing home loans below to see what you can afford.