It’s no secret that rental affordability and availability is decreasing nationally with the national vacancy rate sitting at just 1.0% last October, as reported by SQM Research. Add to this equation the rise in cost of living and rental affordability becomes even more challenging for so many. Many predictions warn that the vacancy rate could drop even lower with the influx of migrants and students returning to the country this year; however, with these challenges, there are equal opportunities that can and will be seen in the near future for renters and investors across Australia, so let’s explore some of the renting realities we’re currently facing.
1. Growth and increased affordability
In October 2022, the Australian government released its 2022-2023 budget. Although initially receiving mixed reviews, this budget promises much-needed relief to the housing market. The government has formed a new national Housing Accord, which sets out to provide a $350 million cash injection to build one million new, well-located homes over five years from mid-2024. The Accord aims to address the current supply challenges and is good news for renters – an increase in housing supply will undoubtedly trickle down to increased vacancy rates, more choice and affordability.
2. Opportunity for investors
With the return of migrants and international students, the demand for rental properties is set to increase further this year. This will directly affect vacancy rates, meaning it’s the perfect time to purchase a rental property as an investment. With our history of good returns on investment, stable local government and an overall strong property market, the appeal to invest in real estate in Australia spans much further than just our shores. With COVID almost being a thing of the past and borders being open, it’s expected that foreign investment and local investment will increase, leading to an increase in residential property development, creating more opportunities for renters to secure affordable housing and for buyers to invest in the property market.
3. Supply chain relief
From computer chips to toilet paper and everything in between, supply chains experienced major disruptions during the pandemic. The construction industry felt the brunt of these shortages, with timber and other crucial materials in short supply in early 2022. While it will take some time for this to level out, data from Construction Dive, courtesy of Gordian, shows that some critical materials like steel and lumber have experienced a significant decrease and are sitting at pre-COVID levels as of Q4 2022. With the price of some materials slowly levelling out, in-progress jobs can be completed, on-hold builds can progress, and new build projects can be taken on. This will ensure that more dwellings are available for both buyers and renters.
4. Rental hot spots
While Western Australia takes out the top spot as the most affordable state to rent in, low vacancy rates often mean your chances of securing one of these affordable rentals are few and far between. For that reason, we’ve collated our rental hot spots based on a combination of high vacancy rates alongside the best median rental prices:
- Australian Capital Territory: Belconnen (2617)
- New South Wales: Roselands (2196)
- Northern Territory: Casuarina (0810)
- Queensland: Springfield Central, Ipswich (4300)
- South Australia: Plympton (5038)
- Tasmania: Devonport (7310)
- Victoria: Caulfield East (3145)
- Western Australia: Osborne Park (6017)
Renting – it’s not all doom and gloom
Renting is still a viable option, but undoubtedly, we face some challenges in the current economy. And while this is the case, it could mean that it’s the perfect time to get your foot in the door and start paying your own mortgage rather than someone else’s. If you’re ready to invest in property or keen to explore your rental options get in contact with your local First National Real Estate office today!