Australia's Rental Housing Market Reaching Breaking Point for Affordability

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Australia,Rental Housing Market,Affordability

Australia's red-hot rental housing market, fueled by record migration and a supply shortage, is becoming increasingly unaffordable for tenants as costs of living rise. Vacancies are at all-time lows and prices have risen by 30% in three years. Rent is now a major driver of inflation, potentially leading to interest rate hikes and further rent increases.

SYDNEY - Australia's red-hot rental housing market, supercharged by record migration and a chronic supply shortage, could be reaching a breaking point for affordability as tenants grapple with rising costs of living.

That in turn would push up the variable rate mortgages held by most Australian landlords who are typically private investors with one or a few properties rather than large corporations, pressuring them to lift rents further and forcing tenants to make tough decisions. Prices across Australia's entire rental stock rose 7.6% in the third quarter from a year ago, the largest increase since 2009, according to official data, and similar to gains seen in the U.S. where rental costs have also surged.Rent inflation is expected to peak at an annual rate of 10% in the next few quarters before easing, Reserve Bank of Australia Governor Michele Bullock said at a Senate hearing on Thursday.

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