It’s a question the approximate third of Australian households who live in a rental house would love an answer to: when are rents going to stop skyrocketing?
One leading property research group says it could happen as soon as next year, but two experts 9news.com.au spoke to were far less certain.
Here’s what you need to know about when Australian rental prices will slow down, and whether governments are doing enough to make it happen.
When is the growth in rent prices going to slow down?
According to new research from property data firm CoreLogic, 2024 is expected to be the welcome year in which Australia’s rental growth is expected to slow.
It points to a number of factors, including tenants turning back to sharehousing as rent becomes less affordable, thereby increasing supply; easing construction costs; and government-built and build-to-rent projects coming into the market.
CoreLogic also looked at whether the forecasted plateauing of interest rates could signal a pause in rental price growth.
“As inflation moves past its peak, the RBA is getting closer to the end of rate hikes,” head of research Eliza Owen wrote.
“This could be good news for renters, because growth in rent values usually tracks roughly with movements in the cash rate.”
Not everyone is quite so sure though.
“I wouldn’t like to be so definitive,” Professor Alan Morris from the Institute for Public Policy and Governance at the University of Technology Sydney told 9news.com.au.
“There’s a reasonable possibility that they will level because the increases have been so tremendous that there’s a point where people just can’t afford those rents…
“But the lack of regulation means that there is a possibility that rents could continue to increase, we just don’t know.”
Dr Chris Martin, senior research fellow at UNSW’s City Futures Research Centre, is similarly cautious.
“I don’t think there’s a single relationship between interest rates and rents,” he told 9news.com.au.
“I don’t think we can conclude that the pressure being felt by rental households is expected to let up automatically.”
He added that supply issues could, in fact, see rents continue to increase for years to come.
“The rate of completion of properties is currently down now on where it’s been in the last few years, certainly before COVID,” he said.
“On that reasoning, we still might have a problem on the supply side, and pressure for rents to go up in the years ahead.”
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Are governments doing enough to address the issue?
Both Morris and Martin called on governments across Australia, both state and federal, to do more to address the current housing crisis.
“If you’re on a government benefit, for example, or disability support pension or, even worse, JobSeeker, to compete in the market with people who are employed is incredibly difficult,” Morris said.
“I think there’s a lot of invisible suffering out there which we’re not aware of.”
In particular, they were both highly critical of the federal government’s signature housing policy – the Housing Australia Future Fund, currently stuck in the Senate awaiting crossbench or opposition support.
The issue with the policy is that it’s not guaranteed funding, instead an investment portfolio from which the earnings will be directed into building social and affordable housing.
“We haven’t had funding to grow the stock of social housing in line with community need,” Martin says.
“That absolutely requires the federal government to be involved because it’s really the fiscal powerhouse in Australia.
“Has it done enough with its Housing Australia Future Fund? Absolutely not. It’s such a contrived and convoluted way of addressing that investment need…
“It’s not good enough. And the scale of it’s not good enough.
“It’s a contrivance and the government hit on a better, simpler and more direct way of doing it when it announced that social housing accelerator at the end of June.”
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Morris agreed the $2 billion policy announced last month was a better approach.
“Hopefully that will start making a difference,” he said.
“I think to rely on the Housing Future Fund to resolve that problem, that’s not going to happen.
“The revenue generated will be minimal. Housing is a very expensive commodity and if you want to be serious about resolving the housing crisis and government playing a major role, you’ve got to dig deep and actually support that with a sizeable amount of tax dollars.
“There was a surplus of $19 billion. I mean, surely a portion of that we want to try to start really addressing the housing crisis in a big way.”
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