Australia's Accelerating Rental Growth Drives Severe Affordability Constraints, Cotality Says
A rapid acceleration of national rents in Australia is driving rental affordability limitations amid a severe supply deficit, Cotality said in a Thursday report.While rental growth moderated slightly to a 1.6% increase in the June quarter, the annual pace of growth accelerated to 5.9% from 5.7% in the first three months of the year, bringing the median national dwelling rent to AU$705 per week, according to the report.National rents have skyrocketed almost 41% during the past five years to add an average of AU$204 per week to household rental obligations. In contrast, median rents rose by just AU$55 per week, or more than 12%, over the the previous five-year period through June 2021."We are seeing a profound shift in affordability across the market," said Cotality Australia's Head of Research Gerard Burg. "In March this year, the typical household was allocating roughly one-third of their gross income to rent, compared to around 27% just five years ago."The ongoing rental growth is mainly driven by a severe lack of available stock across Australia, with the June quarter's national dwelling vacancy rate of 1.6% remaining below the five-year average of 1.8%.The report further showed that total rental listings at the end of June sat nearly 17% below the five-year average and were "exceptionally weak" by historical standards. All capital cities in Australia currently have a vacancy rate below 2%, and while Sydney remains the country's most expensive capital city, Perth and Brisbane substantially narrowed the gap in June."We are approaching a threshold where rental affordability acts as an increasing constraint on further growth, particularly in regional areas where lower median incomes mean households are spending upwards of 35% of their income on rent," Burg said.
