The recent Finder research shows almost half (45%) of Australian renters struggled to pay their rent in April – that’s up from 28% 12 months prior.
CoreLogic data revealed the median asking rent for houses increased in all capital cities.
The biggest increase has been felt in Darwin – where the median asking rent for houses has increased by 22%.
Tenants in Perth (15%), Brisbane (13%), Sydney (9%), and Adelaide (9%) have also been hard hit by rent rises.
Some Key Points from the research
- Finder research shows women (48%) are struggling with their rental payments slightly more than men (41%).
- Rental stress is highest among Gen Z, with a whopping 51% of the youngest generation admitting to struggling.
- That’s compared to 45% of Gen X renters, 43% of Gen Y, and 42% of Baby Boomers.
- Unsurprisingly, rental stress is highest (50%) amongst those with a combined household income of between $10,000 – $49,999.
- Almost half (45%) of Aussie renters with a combined household income of between $50,000 – $99,999 say they struggle to meet rental payments.
- Less surprisingly, just 22% of renters with a combined household income of between $100,000 – $250,000+ say they struggle.
“This spike in rental costs is putting a lot of pressure on tenants, and it’s leaving them with very little money left over for other necessities.
Once they pay the rent – life is very hard.
Some tenants simply can’t afford the rapid increase in their rent in such a short amount of time and there are even stories of families being forced out to live in their cars, or in makeshift tents in the street.”
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Source: Finder analysis of CoreLogic data for February 2022
Megginson said the rental market had become cut-throat.
“Applicants are offering hundreds of dollars more per week than the asking price just so they have somewhere to live.
Others are being forced to move in with family or friends just to keep a roof over their heads.
I know of one landlord on the Gold Coast whose tenant moved out this month. The property manager advised them to increase the rent by $300 a week – over $15,000 a year.
Many people are still financially recovering from disruptions caused by the pandemic and they can’t afford this added pressure on their already tightly-squeezed paychecks.”
Megginson urged those who are struggling to seek out support:
“If you can’t afford your rent and you have a lease now, reach out to your property manager and see if you can come to an agreement with your landlord.
Those currently in a house could consider downsizing to a townhouse or unit, as rent increases for apartments have not been as steep.
Slash all unnecessary expenses and do an emergency audit of all utilities to see where you can save money on things like energy bills and insurance.
Australians at risk of homelessness can call the Homelessness Hotline on 1800 474 753, or the National Debt Helpline on 1800 007 007.
These added rental costs could displace a staggering number of vulnerable people, and with inflation expected to keep rising, rental increases are not likely to go away any time soon.”
Your future income will depend on your tenants’ ability to pay rent
While capital growth is the key to successful property investing, your future income will be dependent upon your tenants’ ability to keep paying you higher rent over the years.
That’s why choosing the right neighbourhood and the right more affluent demographic is critical when selecting the location where to buy your investment property.
And it’s likely that moving forward, thanks to the new Covid normal environment, people will place a greater emphasis on neighbourhood and inner and middle-ring suburbs where more affluent occupants and tenants will be living will be the best investment locations.
On the other hand, outer suburbs and blue-collar suburbs are locations where rental stress is likely to be higher.