It’s official, rental prices in Australia are skyrocketing. From metropolitan cities to the regions, renting a home is now more expensive than ever. So much so that many low-income Australians are struggling to find affordable housing.
This leaves us wondering, when rent prices will go down?
So what are these factors and how will they affect our movements in the future? Whether you’re renewing your lease, moving to a new city or trying out rentvesting, here’s what you need to know.
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- Cost of Renting For First-Timers
Location
Like we highlighted in our home appreciation guide, location is a crucial factor in rent price. This is because landlords will want to be competitive with other similar rentals in the area. It’s like when you’re shopping for electronics or household products, the standard items will usually be priced in the same range.
Renting in high-demand neighbourhoods, like by the beach or in the city can also be more expensive. There isn’t enough beach and city for everyone, and that scarcity will drive up rent prices.
If you’re investing, have in mind the kind of tenant you’re renting the home out to. Is it a young couple? Retirees or families? This will significantly impact the location.
Aspects of the home
Things like size, number of bedrooms and layout are important factors. A rental in good condition will easily get tenants. A rental in great condition, recently renovated, with nice kitchen and bathroom fixtures, will pull a higher price point—even if they’re right beside one another.
So if you’re planning to rent out a place, consider adding value to it before putting it on the market.
Other property features like parking, outdoor areas and views also impact prices. Families, in particular, will usually want a backyard or garden for children. And of course, if the rental property offers amenities like a swimming pool, gym, or entertainment area, this tends to increase the price point. But know that there can be an excessive rent increase, and to be aware of your rights.
Desire for flexibility
From the start of the pandemic, rental prices have gone up while average income has gotten lost behind, widening the gap and decreasing rent affordability. It’s no secret that the cost of buying a home has gone up as well. Millennials are preferring to rent homes, rather than save up for a huge deposit.
They’re prioritising freedom and flexibility, over the expenses of home ownership. Which is why the many cities are still experiencing a demand in rental properties from the millennial demographic.
Easy access to amenities
By amenities, we don’t mean pools and gyms, we’re talking about accessibility. The more connected a neighbourhood, the higher the rent will be.
Most people want to be in close distance to parks, shopping centres and healthcare providers. Young families will prioritise short distances to schools as well. So you’ll find that these suburbs tend to have high rental prices, like in the CBD, where high rent cost is common knowledge.
The weather in the region
There seems to be a seasonal pattern when it comes to real estate prices. Summer tends to be the busiest season, with people moving around and driving up rental prices. Moving is usually avoided in colder seasons like winter.
With many forced into their homes during lockdowns, the demand for coastal and forested properties also increased. The more time we spent at home, the more we realised the value in a home we love. And as such, the rental prices in regional areas got higher and higher.
Average income
Most Australians would fork out 20-30% of their income on rent. So if you look at rental prices across the country, you’ll find that they usually correlate with the local wage. Higher salaries mean more money to spend on rent.
The opposite applies to other regions. With lower ages, renters will not be willing to spend as much on rent. Along with rental payments, tenants need to take into account other expenses like electricity and transport.
Vacancy rates
Property prices, both in renting and buying, work on a supply and demand basis. This means that areas with more vacant homes will most likely have lower rental prices. Tenants have more choice in areas like these, which force landlords to be more competitive.
Again, the opposite applies to high demand areas, which will usually have higher rent prices. City centres, like in Melbourne and Sydney, were amongst the most expensive to rent in Australia. However, things changed in the pandemic.
We closed our borders and university students, who made up a large portion of the tenants, were no longer allowed in the country. Which explains why rent affordability increased in parts of the inner-cities.
Want to stay ahead of the curve?
If you’re on the hunt for apartments to rent, we can also help you out in that department. Browse our search page to check out some amazing listings available right now.
But don’t just stop there, download our app to get the full Soho experience. Just remember to shortlist or swipe left on our listings so we can send you others that better match what you’re looking for.
