Why you might be struggling to keep pace with rent rises

June 15, 2023

Apartment rents across Australia have increased six times faster than wages and house rents have climbed at triple the rate, leaving many tenants struggling to make ends meet.


Median weekly asking rents for apartments in the capital cities rose 22.2 per cent over the year to March, Domain data shows, while wages rose just 3.7 per cent over the year, the latest figures from the Australian Bureau of Statistics show.

Annual growth in rents vs wages – houses




Unit rents increased more than six times faster in Sydney and Melbourne, where the medians jumped by 24 per cent and 23.1 per cent respectively, to $620 and $480 per week. Median house rents rose 13 per cent across the combined capital cities. Perth had the largest increase at 14.6 per cent, while asking rents rose 10 per cent in Sydney, 11.1 per cent in Melbourne and 12 per cent in Brisbane.


Westpac senior economist Matthew Hassan said Australian tenants were facing strong competition for homes. Returning migration was adding to already strong demand, amid a time of lower supply – due to a drop in homes being built and some investors cashing out of the market during the boom. Rents had climbed rapidly as a result, particularly in inner Melbourne and Sydney where they skyrocketed 40 per cent and 29.3 per cent respectively over the year, rebounding from sharp declines earlier in the pandemic.


“I think the initial jump in rents was a catch-up from COVID, but it’s now gone beyond that,” Hassan said.


A decrease in household sizes earlier in the pandemic, as tenants sought more space, was likely to be reversed as a result, Hassan said.


“Now we’re going back to the pre-existing trend [of people moving back home, or share-housing to afford rent],” he said, adding more households could look to take on boarders, as was common in the 1950s and 1960s as a solution to the rising costs of mortgages.


Median income households now need to spend almost a third of their pay (30.8 per cent) on rent for a new lease, the highest level since 2014, the recent ANZ CoreLogic Housing Affordability Report showedThis climbs to 51.6 per cent for lower income households. Hassan said the market was extremely tough for those on lower incomes, and noted the longer rents outpaced incomes, the harder it would become.


“It’s pretty bleak. It doesn’t seem anything in the short term will be improving that,” Hassan said.


Reserve Bank governor Philip Lowe told a Senate estimates hearing on Wednesday, that people may have to move back in with family or a flatmate to reduce their rent costs, after moving out during COVID-19.


“The higher prices lead people to economise on housing. That’s the price mechanism at work,” he said. “We need more people, on average to live in each dwelling.”


The sharp hikes have pushed more fortunate tenants such as Sydney marketing professional Ryan Wright to buy property. His landlord tried to hike the rent on his Waterloo apartment by $200 per week last year, and while he and his partner negotiated a smaller increase, they knew further rises were likely. Unit rents in the suburbs lifted 21 per cent over the year to March.


“We were paying $875 per week, but then the landlord tried to raise the rent to more than $1000. We negotiated a $75 per week rise.


“The laws mean landlords can only raise the rent every 12 months, so when the lease expired in March, we decided to buy because the repayments on our home loan are less than $1100 per week.”


That is cheaper than some advertised rents for two and three-bedroom apartments in the suburb, Wright said.


“We’re in a very privileged position because we can afford to buy, but there are so many people just being pushed out because they can’t afford the rent increases,” Wright said.


Barry Plant Melbourne executive director Mike McCarthy said tenants were making tough decisions about where and what they are renting.


“It’s like the stress we have seen for people purchasing a home who have had to readjust their budgets as interest rates rise, we’re now seeing that phenomenon extend to the rental market,” McCarthy said.

“People are changing the type of property they want to rent and changing it to a less expensive property like a townhouse or an apartment,” he said.

Anglicare Australia acting executive director Maiy Azize said a growing number of working Australians were unable to afford their rent and rising living costs.


“Rents have been surging for years … [and] wages are not keeping up,” she said.


Fewer available rentals is adding pressure to a tight market. Photo: Flavio Brancaleone


The situation was worse for those on the pension or other support payments, she said. More people were sleeping rough, and homelessness services were having to turn away one in three people in need.


“Some people are couch-surfing for months at a time or sleeping in cars,” she said.


“Even average people who are working are finding themselves in rentals they just can’t afford, and they’re not sleeping rough, but they’re being completely wiped out [financially by rent increases].”


Azize said more social and affordable housing was desperately needed to help address the crisis, and payments such as JobSeeker and Youth Allowance needed to be increased.


Source: Domain.com.au

You might be also interested in

Gettyimages 2006354243
Federal Budget 2024: $6.2b housing splash
The federal government has unveiled $6.2 billion in new housing spending in this year’s budget, with a major focus on housing for Aussies doing it tough. With near record low
Money 7864149cfb2
Federal Budget 2024: How this year’s budget tackles the rising cost of living
Tax cuts, energy bill relief and rent assistance are among the measures in this year’s federal budget aimed at bringing down the rising cost of living. Federal treasurer Jim Chalmers
Gettyimages 622528618
Is the mortgage loyalty tax a thing of the past?
New and existing home loan customers are now paying almost the same interest rates, with the difference shrinking to the smallest it’s been in the past five years. Since the
West Hoxton
Budget 2024: The roads, rail and regional hotspots getting billions
The 2024 federal budget has unveiled a range of initiatives aimed at tackling Australia’s housing issues head-on, but it’s also provided billions of dollars to build more infrastructure across the
Capi 1e0e766d2d5233a56cca5d4cd86b5710 09df85bc29deb103c8cadb5a2c2c7897
Cost of living: underinsurance effects 200,000 Aussies
Rising costs and affordability challenges has pushed Australia into an underinsurance crisis, which could cost homeowners hundreds of thousands of dollars when faced with disaster. In Australia, 13.1 million homeowners
Gettyimages 908296490 88041054c55
Biggest surprises of Australia’s rental market revealed
In some parts of Australia, rents are bafflingly high, while in others, they’re surprisingly affordable. In some cities, it’s the areas you’d least expect that are showing the highest rental
Higher for longer? The new cash rate paradigm
Research Director Tim Lawless unpacks what today’s cash rate decision means for the housing market. The interest rate outlook has changed remarkably in a short space of time. It was
Capi Eaca2a4a670f7182c240bbb3ada7028a Dde6cc44b571f6374cf0e9f8edab769b
Rent crisis: Vast majority of Victoria now home to ‘extreme rental pain’, but silver lining for Docklands
More than three-quarters of Victoria is now in extreme rental pain after the state notched the second-fastest rent rises in the country across the past year. But there are signs
Frankston 913595467e9
Why now is the time to invest in this unloved state, and where to buy
Victoria’s property investment prospects remain strong despite prices going backwards and an ‘outrageous cash grab’ by the state government that has prompted many investors to flee, according to property experts.
Gettyimages 1222002808
Are higher interest rates forcing investors to sell up?
More landlords in Melbourne and Sydney are selling off their investment properties compared to a year ago, new research suggests. PropTrack data shows the estimated share of home sales in

Get your Free Property Guide.

Here goes your text ... Select any part of your text to access the formatting toolbar.

Get your free Sales Report for Why you might be struggling to keep pace with rent rises

Get your free Sales Report for Why you might be struggling to keep pace with rent rises

Subscribe to hear the latest

Start The Conversation Today.

Call us on:

1300 850 730

Request a Callback:

Send us a Message:

Privacy Policy

Get your Free Property Guide

Get your free Suburb Report for Why you might be struggling to keep pace with rent rises

Privacy Policy

Who we are

Suggested text: Our website address is: https://motionproperty.com.au.


Suggested text: When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection.

An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.


Suggested text: If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.


Suggested text: If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year.

If you visit our login page, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser.

When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select “Remember Me”, your login will persist for two weeks. If you log out of your account, the login cookies will be removed.

If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

Embedded content from other websites

Suggested text: Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website.

These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Who we share your data with

Suggested text: If you request a password reset, your IP address will be included in the reset email.

How long we retain your data

Suggested text: If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue.

For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

What rights you have over your data

Suggested text: If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

Where your data is sent

Suggested text: Visitor comments may be checked through an automated spam detection service.

Get your Free PDF copy of Make Money Simple Again