As our reports on the rental property market crisis show,inspections for rentals in Sydney’s inner and eastern suburbs have more than doubled in a year.
Many house hunters are offering real estate agents more than the advertised rates of weekly rent just to improve their chances. This new rental bidding war is pushing up prices to extraordinary levels – despite a ban on agents from soliciting rent bidding.
The Sun-Herald welcomes NSW Fair Trading flagging tougher enforcement of rental bidding laws. As Tenant’s Union of NSW chief executive officer Leo Patterson Ross observes,landlords who accept higher offers of rent are “leveraging people’s desperation”.
Advertised rents have increased by more than 10 per cent in Sydney over the past five years,according to the – which show about one-third of Australian households are renters. Those households tend to be younger,have lower incomes and less wealth than owner-occupiers.
The rental market is tight and increasing rent,combined with rising cost-of-living pressures,is compounding financial stress for many people.
Domain data shows the number of people registering to inspect properties in Sydney’s eastern suburbs was up 145 per cent in February,compared with the same time last year. Inspections of properties in central Sydney and the inner south increased by 106 per cent,with queues of up to 50 people now commonplace in suburbs such as Zetland and Chippendale.
Shortfalls of public housing for those most in need are becoming more critical,with the number of “greatest need” households on public housing waiting lists almost doubling since 2016.
As the Reserve Bank explains,rental vacancy rates have declined across Australia over the past few years,after increasing during the pandemic,especially in Sydney and Melbourne. At the same time,rent inflation has picked up over the past year as demand outstrips supply. The bank says it expects the strong growth in rents to continue over coming years.
Since the start of 2022,strong growth in advertised rents is being reflected in higher rents. A 4 per cent rise in rent inflation recorded last year was the strongest in 10 years. The rent growth to pick up even further in the year ahead.
Looking ahead,the supply of new rentals will be tempered by higher interest rates and construction costs,and reduced demand for new dwellings. Vacancy rates are therefore likely to remain at low levels. That’s despite the return of new migrants and rising rental yields,which would otherwise provide an incentive to build new housing.
Renters are also more likely to experience financial stress than mortgagors. Indeed,people with concerns about rent account for a significant increase in calls to the National Debt Helpline.
Economist Angela Jackson warns that increasing housing costs mean an entire generation now faces a lifetime of renting. Those on below-average wages,without a significant inheritance coming their way,will find it impossible to enter the housing market.
That reality is now showing up in,which show homeownership rates have started to fall,particularly for young people,but also among people aged 50 to 54. As Jackson predicts,things aren’t going to get easier for inner-city renters anytime soon.
With more than 2 million people in the NSW private rental market,policymakers need to provide a robust response to home ownership becoming out of reach for a growing proportion of the population.
The Sun-Herald welcomes bipartisan support for bans against rent bidding but calls on the major parties to consider larger scale rental reform that considers how greater security of tenure can be assured for people for whom renting is now a long-term proposition.
The merits of introducing longer notice periods,reforms to Airbnb arrangements and development of affordable housing co-operatives are among initiatives that may be worth exploring. The need for longer-term planning to ensure we have enough housing supply to meet future demand – and incentives for the provision of more affordable housing in new developments – should also be considered. With a state election looming,an incoming government will need to make housing affordability and rental reform an urgent priority in its early days.