A new analysis highlights the severe impact of rent inflation on Australians living in capital cities.
The report from Everybody’s Home, based on SQM Research data, reveals that renters in major cities are now paying $14,700 (US$9,900) more annually for houses, and close to $9,600 more for units compared to January 2020.
The analysis shows that rental prices have surged dramatically across the country, with Sydney and Perth experiencing the sharpest increases. Renters in Brisbane and Adelaide have also felt the pinch.
These soaring rent prices are placing enormous pressure on households, with urban renters bearing the brunt of this inflationary spike.
Everybody’s Home spokesperson Maiy Azize said, “The biggest cost-of-living expense for most people living in Australia is keeping a roof over their head.
“The steep rise in rents is pushing more people into severe housing stress and homelessness. People are sacrificing the necessities to afford the rent, living in appalling unhealthy conditions because there’s nowhere else for them to go, and ditching important life decisions because of housing insecurity.”
The report highlights that Sydney, Australia’s largest city, has seen house rents increase by $356 per week, translating to an annual increase of $18,512. Perth follows closely with a $352 weekly hike in house rents, totalling an additional $18,304 annually.
In both cities, unit rents have also risen sharply, with weekly increases of $201 in Sydney and $279 in Perth, resulting in respective annual hikes of $10,452 and $14,508.
Unit rents in Brisbane and Adelaide have increased by $199 and $196 per week, respectively. Even in smaller capitals such as Hobart and Darwin, renters are experiencing significant rent inflation, with Darwin house rents surging by $281 per week and Hobart unit rents rising by $42 per week.
Australian Bureau of Statistics (ABS) data corroborates these findings, noting a marked acceleration in rental inflation in capital cities since mid-2021.
The return of demand to inner-city areas, following the unwinding of COVID-19-related disruptions, has been a significant driver of these price hikes.
Vacancy rates in inner-city suburbs, especially those within 12.5 kilometres of central business districts, have dropped sharply as more people return to urban living.
Interestingly, rental inflation trends vary based on a property’s proximity to the city centre. While rents in suburban and regional areas peaked earlier and have since begun to stabilise, those closer to capital cities continue to rise.
Since March 2023, capital city rent inflation has consistently outpaced regional areas, although the overall increase in regional rents since 2019 remains higher.
Another analysis by Homelessness Australia released early this year shows that a 16- to 17-year-old teenager sharing property in Sydney spends 94 percent of their income on rental, albeit lower than 99 percent in the previous year.
While rents have markedly increased since pre-pandemic values, according to Andrew Wilson, chief economist of My Housing Market, recent movements have been subdued.
He said Australia’s capital city rental markets experienced mixed results in September as vacancy rates continued to tighten following an easing earlier in the year.
While house rents generally declined, rental growth for units varied across cities. He said major cities such as Brisbane, Sydney, Perth, Adelaide, and Melbourne saw decreases in house rents, falling by 0.4 percent, 1.2 percent, 1.5 percent, 1.6 percent, and 2.4 percent, respectively.
