Rental crisis: The 3 big reasons you can’t find a home
When is a bedroom not a bedroom? When it's a tiny closet being advertised as a second bedder for a premium price.
Sorting out whether a listing actually has the number of bedrooms advertised, or whether one of those rooms is a closet, study nook, sunroom or other small unworkable space, is just one of the issues renters are dealing with right now.
Australia's rental crisis has hit new heights, following a perfect storm of dwindling rental supply, growing tenant demand and additional pressure from recent devastating floods.
The latest data from Domain confirms that 6 out of our 8 capital cities currently have a vacancy rate of 1% or less, while the other 2 state capitals, Sydney and Melbourne, are 1.9% and 2.4% respectively.
Monthly rental vacancy rates – February 2022
Source: Domain
A vacancy rate of 2-3% is considered healthy and balanced, and below 1% is considered extremely tight.
It's good news for landlords, who dealt with the stress and uncertainty of eviction moratoriums and reduced or no rental income in 2020. But for tenants, it's a nightmare.
"To put things into perspective, a property that was asking $300 a week is now $476*, according to Rent Rabbit, which is now pushing the rentals that were available and affordable to the unavailable and unaffordable status," explains Ray Dib, CEO and co-founder of MyBond.
What is causing the rental property shortage?
A number of issues are at play, including but not limited to:
- A shortage of homes. Eviction moratoriums and insecure rental income made investors nervous during the pandemic, so they pulled back and invested their money elsewhere. This has contributed to fewer rental homes being available.
- Homes taken off the rental market. Low mortgage interest rates also encouraged a record number of first homebuyers into home buying, taking a chunk of affordable homes off the rental market. Although, this trend is slowing, with more Aussies now forced to live at home as the housing generation gap widens.
- Increasing demand. People who put off plans during COVID to get married, move out or move in with someone else have hit the "unpause" button, so there are more people shopping for rental homes.
Still, Dib argues that what we're seeing right now is not a rental property shortage.
"With this apparent 'rental shortage', too many Australians are now being frozen out of the market and are finding it tough," he says.
"But in a nutshell, there isn't a rental shortage; there is a rental affordability issue, disguised as a rental shortage problem."
Either way, the situation is grim for those who are searching for somewhere to live.
Just how bad is it for renters?
If you're trying to find a rental home at the moment, it's not easy.
Sydney house-hunter Nicola has a good reason for trying to find a new rental – her current property is in a complete state of disrepair.
"We have lots of leaks, crumbling plaster, severely cracked walls and the master bedroom sunroom leaks so much we've had to have the carpet ripped up, because there was mould growing all across it," she explains.
"The owners have been delaying repairs and we've been complaining for months… so I'm currently looking to move somewhere smaller. Everything is so expensive and so pokey and mouldy."
Nicola viewed a house recently and quickly realised the owners had painted over the top of damp.
"I saw it instantly and asked the real estate agent about it. She said, 'Oh, I don't know about that, I'll have to find out'. I just felt so sorry for the younger people viewing who don't know what to look for or how bad that can be."
When a bedroom is not a bedroom...
Nicola has also noticed a "big trend" of houses claiming to be 3 bedrooms, and when you turn up, "the third bedroom is an office – or a badly renovated attic at best".
This is something that Ben, currently scouring the market for somewhere to live in Sydney's Eastern Suburbs, has also encountered more than once.
"I've attended several inspections for apartments that were '2 bedrooms', but they were actually just a 1-bedroom with a study that could fit a single bed," he says.
"Honestly, I think there should be regulation around what can be advertised as a bedroom, like a minimum square metre size, or at the very least... post an up-to-date floor plan. It's a huge waste of time for renters when they rock up to an inspection and have essentially been misled."
The situation is getting so dire in some areas that industry groups are calling on Airbnb landlords to remove their properties from rental home platforms, in favour of putting the properties back into the long-term rental market.
"It's difficult to see any way that this wave of demand can be met without the support of property owners moving their properties to the long term rental market," says Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella.
Meanwhile, Dib has a few tips for renters who are struggling to find a home:
- Determine what your rental motivation is. Is it because you need to move out of your current place, you're trying to save money, or you're ready to move out? Are you trying to be closer to public transport and amenities, work or school? Work out your bottom line, to keep you focused during your search.
- Go to as many open homes as you can. Even if they're properties that don't seem to suit at first glance, check them out. You might be surprised by a property that actually presents differently to the photos, and you can also get an understanding of what other properties are renting for.
- Make your application stand out. "When you apply... make it super easy for the agent to say yes," Dib says. This could be with a rental CV that showcases your strong payment record, or confirmation that your bond is ready to be paid upon acceptance of your application.
Our renting guide can help you know your rights and navigate the rental market.
