Couple moving to their new rented house

Impact of Rent Increase on New and Existing Tenants


Affordable rental housing is vital for the welfare of renters, who typically have lower incomes. Australia’s rental market has seen surging demand due to factors like the COVID-19 pandemic and the revival of international migration, leading to escalated advertised rents and tighter vacancy rates. The Australian Bureau of Statistics (ABS) has responded by incorporating a new dataset into the Consumer Price Index (CPI), which comprises around 600,000 rental properties. However, it’s worth noting that this dataset solely incorporates private rentals, while the CPI covers both public and private markets, taking rental assistance into account.

Couple talking to their tenant
Couple looking at laptop for rent increase

Nationwide, rent prices have been on an upward trajectory since 2021, with the Australian Capital Territory commanding the highest median weekly rent, and South Australia registering the lowest. Most lease agreements last for 12 months or less, but there’s a growing trend towards longer-term leases. Tenant turnover remains fairly consistent across states. The difference between advertised rents and CPI rents can be ascribed to the small proportion of properties that advertised rents represent. With regional areas making up a considerable part of rental properties, the new dataset sheds light on rent inflation in both these areas and capital cities. Influential factors in the rental market during the pandemic included diminished rental demand in inner-city markets, conversions of short-term rentals, and preferences for roomier housing outside urban centers.

Rent inflation fluctuated across capital cities and regional areas during the pandemic. Regional areas saw larger rent increases, spurred by population growth and low vacancy rates. Conversely, certain capital cities registered rent decreases due to boosted rental supply and slowed population growth. Inner-city areas in Sydney and Melbourne endured the steepest rent declines because of rent renegotiations and an increased availability of rental properties. Recently, both capital cities and regional areas have been experiencing heightened rent inflation, surpassing the rent inflation reported by the CPI. However, many inner-city areas in Melbourne and Sydney are yet to rebound to pre-pandemic rent levels, despite new tenancies in these areas witnessing significant rent increases.

Rental price hikes have become more frequent and larger in scale in capital cities, impacting both new and existing tenants. Most properties, especially those with new tenants, have seen substantial rent increases. High-end rental properties have witnessed more significant rent hikes, while those at the lower end have experienced comparatively minor increases.

These rent increases place a financial strain on lower-income households, which allocate a higher percentage of their income to essential expenses. The rents paid by new tenants have been escalating, indicating market price trends. Over the past year, rents paid by new tenants have surged by 14%, outpacing the rent index measured by the CPI. Apartments with new tenants have experienced more pronounced volatility in rent prices compared to houses and townhouses. If vacancy rates continue to be low, advertised rents are likely to keep climbing, thereby affecting the CPI and influencing landlords’ pricing decisions in the broader rental market.


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