Rising rent prices: Extreme measures and where to get support
Interest rate rises, a lack of housing and growing demand have seen rent costs rise across Australia. Here's how it's affecting people.
In 2022, the Reserve Bank of Australia (RBA) increased the cash rate over 8 consecutive months, bringing it to 3.10%.
This has increased costs for people with mortgages and has contributed to rent increases as investors pass on costs to their tenants.
In an effort to control the rise in rental prices and improve affordability, the NSW state government has made the practice of rental bidding illegal as of Saturday 17 December 2022.
This means that real estate agents will now be banned from asking renters to bid higher than a property's listing price.
But for some people, the higher costs are already a difficult reality.
Annual growth in rent values rose to a record 10% across Australia in 2022 according to data from CoreLogic's most recent Quarterly Rental Review (released in October 2022).
That follows rent rises from 2021 and 2020.
"Since August 2020, national dwelling rents have surged almost 20%, equivalent to a weekly rent rise of approximately $90 per week," CoreLogic research analyst and report author Kaytlin Ezzy said in a press statement.
This means a rental property that was $600 a week last year would be $660 a week this year based on the 10% national annual growth rate.
That's around $3,120 extra in rent over a year.
CoreLogic data found rental costs have been rising since the start of the pandemic. Image: Getty Images
Rent rises and affordability
In April 2022, Anglicare Australia released its annual Rental Affordability Snapshot, which compared 45,992 rental listings against the minimum and low-income rates.
It found less than 2% of rentals were affordable for a full-time worker on the minimum wage and just 1 sharehouse would have been affordable for someone on Youth Allowance.
Anglicare Australia executive director Kasy Chambers said even families were more affected including those with 2 parents working full-time, with 2 children and family tax benefits.
"What we found that really shocked us was we were right down to 15.3% [for these families] and it used to be about a quarter of properties were affordable," she said in an interview with Finder.
"And if you think about it, that's often who people tell us that the private rental market is aimed at – your average family who might be working in retail, security, agricultural workers, even aged care and those kinds of areas," Chambers added.
The Anglicare Australia Rental Affordability Snapshot for 2022 looked at a range of rental properties, including some share houses. Most were unaffordable for people on low or minimum incomes regardless of age or household size. Image: Getty Images
Extreme measures to manage rent
Chambers said the market means the international benchmark of spending no more than 30% of your income on housing is now out of reach for a lot more people.
So what we see is people spending right up to 80% of their income on rent, which of course leaves very little, particularly when you're on some of those [government support] payments.”
For a single person on JobSeeker, the maximum payment is $668.40 per fortnight. If 80% of that went on rent, they would have just $133.68 left over for everything else in that fortnight.
Chambers said Anglicare Australia is seeing a growing number of people sacrifice essentials to help manage rent costs.
We often see adults skipping 2–3 meals a week. If they've got children, they'll often really work hard to make sure the children have something to eat, but breakfast for the adults just is nothing.”
Despite the challenges of rental affordability, Chambers said the people they work with are often great at budgeting.
"These are the people constantly juggling things. They know where all the cheap things are and they are constantly weighing up [money] decisions."
Chambers has found people in unaffordable rental situations are often great at budgeting – because they have to find ways to deal with it. Image: Getty Images
Tips to manage a rent rise
Create or update a budget for your money
Creating a budget is a great way to keep on top of your expenses. If you need a bit of help creating a budget or with money management in general, you might want to download a budget or money-saving app.
Check out ways to save on groceries, petrol and other essentials
With almost everything in the supermarket going up in price, it's important to try to save money on groceries. Some of the ways to save include shopping at night, creating a meal plan and buying frozen or tinned. Try to find ways to repurpose your leftovers as wasting your leftovers could be setting you back over $1,000 a year.
Look at different suburbs for a cheaper price
If your lease is almost ending, it's always a good idea to look around at different places both in your suburb and other areas before renewing your lease. You might be able to find somewhere you like even more than your home at a more affordable price.
See if you can negotiate a smaller increase
If your real estate agent proposes a rent increase, don't accept it without negotiating. Make sure to do a lot of research by looking at similar properties around your area and making sure you aren't being unfairly charged.
I got an email from my real estate agent the other week saying they wanted to raise my rent by quite a significant amount. I did a bit of research looking at similar properties in the area and sent them back a price I'd be willing to pay, plus reminded them we've been reliable tenants. Fortunately, they accepted. I'm sure a lot of landlords and real estate agents will be doing this over the next few months. Don't just accept the hike.
Gary Ross Hunter
Senior writer, insurance
What about borrowing money for rent?
Leo Patterson Ross, CEO of the Tenants' Union of NSW, told Finder there have always been some renters who need to borrow money or put rent on credit cards.
"We certainly are seeing a rise in this risky behaviour as prices for the essential service of housing continue to be set without oversight," he said.
"Increasingly, it is the bond that is the target for lenders because the double bond of new and old home is a particular pain point and as rents increase so does the bond.
"NSW government has the ability to help here by implementing the bond transfer system legislated in 2018 alongside expanding and improving [the] interest-free loan system (similarly to the ACT)," Ross said.
Chambers said borrowing money to cover rent was very risky but most people only considered it as an extreme and last resort.
"I really want to emphasise that these are not people making stupid decisions… if you're trying to get food onto the table for your kids, anything that's going to [help] whether that's a really high-interest payday loan or putting something onto buy now pay later [BNPL] – school clothes or something that you can put onto that in order to free up money to pay your rent – it's a very logical thing to do."
She said the lack of official regulation for BNPL is "really disastrous" for people struggling to afford rent and other essentials.
"We are seeing people who are really in trouble with those products, who would not have got that loan if they had to go to a credit provider who was under the normal credit regulation."
State and territory tenant unions can help people get clarity on their rights when dealing with rent rises and bond payments. Image: Getty Images
Where to get support
If you're struggling with rent rises and affordability, here's a list of support services that might be helpful.
- Ask Izzy https://askizzy.org.au
- Anglicare Australia https://www.anglicare.asn.au
- National Debt Helpline (1800 007 007) https://ndh.org.au
- Financial Rights Legal Centre https://financialrights.org.au
- Tenants' Union of NSW https://www.tenants.org.au/tu
- Tenants Victoria https://www.tenantsvic.org.au
- Tenants Queensland http://tenantsqld.org.au
- Tenants' Advice Service (NT) http://www.dcls.org.au/legal-and-advocacy-services/tenants-advice
- Tenants' Union (SA) http://www.syc.net.au/tias/overview
- Tenants' Union of Tasmania http://tutas.org.au
- Tenants' Union (WA) https://circlegreen.org.au/
- Tenancy Advice Service ACT http://www.legalaidact.org.au/tasact
For some additional reading, check out our cost of living or budgeting hub.
Images: Getty Images, Finder (Luke Dubbelde)
