With 85% of Australian suburbs experiencing a dearth of rental properties, the media is no longer calling it a rental shortage but a “rental crisis”. With this rental crisis comes hikes in weekly rental prices, bidding wars between renters for properties, and an overall increase in living costs. This is especially hard on new migrants and international students who are already struggling to find their feet in a new country.
5 Reasons for the 2022 Rental Crisis
The rental crisis has been caused by a perfect storm of factors. Here are some reasons:
Higher interest rates on buying a home
Australians are having to rent instead of buying a house.
Housing prices have increased significantly in the past few years, making it difficult for first-home buyers to enter the market. This, coupled with a increased cost-of-living and trying to save for a 20% deposit is pushing more people into the rental market. Secondly, job insecurity is rising, making it difficult for people to commit to a long-term mortgage. The situation has been exacerbated by the pandemic as people who lost their jobs could no longer afford to pay rent. For many people, owning a home is simply not achievable or too risky.
Investment in housing has weakened – and confidence is low after many of Australia's most prominent home builders went bust during Covid
The rental crisis is also being fuelled by a lack of investment in housing. The number of people buying property to rent it out has decreased significantly during Covid, as has the number of properties being built for rent.
This is because housing prices are so high that investing in rental properties is not as profitable anymore. The situation has been exacerbated by the fact that several of Australia’s biggest home builders went bust during the pandemic, which is making this another “risky” option for both investors and first time home buyers.
There are not enough properties to meet the demand of renters
The borders have re-opened and overseas students, migrants and returning Australians are coming back to Australia and looking for somewhere to live. Most migrants are not in a position to buy a home immediately, either due to visa restrictions or they just don’t know the suburbs well enough yet. For the first time, Personnel Relocations is also seeing a huge increase in the number of New Zealanders moving to Australia.
There are simply not enough properties to meet this demand. New arrivals into Australia are at even a higher risk of losing out on a good rental because they arrive here with little of not credit history and have to compete with so many locals. Owner of Personnel Relocations, Robyn Vogels said “This is not a city problem, it is out inthe suburbs, we are seeing at least 20 people at every inspection these days. The odds are definitely stacked against international arrivals, they must be prepared in order to get ahead.”
Rental homes are used for short-term stays
During Covid, many furnished properties flooded the rental market from Airbnb, because there were no tourists, these homes rather rented out for long stays. This is now reversing and we are seeing these homes removed from the rental boards and returning to Airbnb. Again, this is impacting the stock of rental homes and especially the quality. Airbnb homes were often furnished and maintained to a high standard.
Australia has a shortfall of 524,000 social housing options
Social housing in Australia is in high demand, but there is a severe shortfall of properties. This means low-income earners are forced to enter the private rental market, making the competition for homes even more fierce.
Related article: How far in advance should you look for a house to rent in Australia?
What can international arrivals do to navigate the rental crisis?
There are many things you have to prepare for, including higher costs of rental properties, bidding wars and making sure your rental application is perfect.
If you are planning your rental budget now, be prepared that the prices will probably go up in the next few months. Our client in Brisbane, for example, was outbid even after offering a much higher price!
Moving to Australia in December or January may be extra challenging for you because the locals are not moving house. There’s Christmas, New Year and the school holidays. The private schools break up in the first week of December, and they don’t return until after Australia Day, the 26th of January. So that’s two months that the rental market just takes a complete dive. But that’s also the busiest time of the year with more people looking to settle before the start of the school year. This means there will be even more demand and less availability.
You should consider ways to compromise on your rental budget. With the shortage of rental properties, you may need to pay more than you had originally anticipated or move further away from the city or from the beach.
Understand the rental process
If you want your rental application to go through without a hitch, ensure you use the right platform and have the right automation system. Somebody will need to inspect the property for you; otherwise, the estate agent can’t process your application.
Remember to upload all of the required supporting documents, too. The agents won’t wait around if your paperwork is not complete or missing information.
Be prepared to move quickly when you find a property that you like. The competition for rental properties is fierce, and you will need to be organised ahead of time so you can put in an offer immediately.
Check homes carefully
Because there’s such a shortage of rentals at the moment, there are some properties out there that I don’t even think are safe to be habited at the moment!
Also, when you inspect a home, do so with your head, not with your heart. When we inspect on behalf of our clients, for example, we usually see other potential tenants working out where the sofa could go, what decor blends well with the interior or how Johnny’s bed might look with the green walls. They don’t look up at the ceiling and see that there’s a roof leak. Check everything, you only have a few minutes, you must have military precision.
Personnel Relocations simplifies the process of relocation to make it comfortable and hassle-free at an affordable price. With excellent care and the right guidance, Personnel Relocations can help your employees make the right start in Australia.
We understand that every relocation is different and each one has different goals. To contribute to your employees’ settling in Australia, we have alliances with experts such as relocation mentors, life coaches, cross-culture trainers, baby equipment hire, business communication specialists, local and international furniture removals, interior designers, decluttering, unpacking and setting up trades services who can help with specific needs.
It is not unusual for Personnel Relocations to handle the full suite of relocation needs, all from just one call.