With the COVID outbreaks spreading across Australia, resulting in lockdowns continuing, the rental stress is rising and it is set to worsen according to new research.
Here is an article from savings.com.au we thought that we should share which you may find very interesting.
‘Biggest rent hikes since the GFC’
More than two-thirds of tenants across the country are under rental stress and the longer lockdowns continue, the worse it’ll get, according to new research.
The number of renters spending more than 41% of their income on rent has increased 8% over the past six months to June 2021, according to a survey of 1,500 households by ME Bank.
A common yardstick for measuring rental stress is if a tenant spends more than 30% of their pre-tax income on rent.
Single parents, couples with young kids, retirees, and households on low and below-average incomes reported higher levels of rent stress.
More women (75%) reported being ‘rent stressed’ than men (60%).
ME Bank consulting economist Jeff Oughton said a number of factors have been pushing rents higher.
“Rental markets have tightened markedly across the majority of Australia and rents have risen significantly due to falling vacancies,” Mr. Oughton said.
“Renters are now facing some of the biggest rent hikes we’ve since the global financial crisis.”
According to the latest CoreLogic data, the median rent for houses and units in June 2021 jumped to $476 per week, a 6.6% increase compared with the same time last year.
A recent rental report by Domain also found that rent prices have hit record highs in most capital cities, with Brisbane recording the biggest increase in around 15 years.
With Brisbane and the rest of south-east Queensland, as well as Sydney under lockdown, Mr. Oughton said more tenants will struggle to pay their rents the longer COVID lockdowns drag on.
“While wage gains, on average, have picked up slightly from the historical lows recorded at the onset of the pandemic, government income support has gradually unwound, and rental moratoriums have ended,” he said.
“We may see more renters facing hardship as lockdowns continue, particularly among low-income, low-saving households reliant on government support.”
Homeowners less stressed than renters
The survey also found that compared with rent stress, mortgage stress is lower. Just under half (42%) of borrowers said they were paying more than 30% of their income on mortgage repayments.
“A recovery in economic activity, very low-interest rates and the deferral of loan repayments by some households have helped contain mortgage stress,” Mr. Oughton said.
“Furthermore, households are well ahead of their minimum repayments and have significant net equity or savings in their home loans.”
A recent analysis by CoreLogic found that servicing a mortgage is cheaper than paying rent on more than a third (36.2%) of properties (3,411 suburbs), which is higher than the pre-COVID proportion of 33.9% reported in February last year.
More than 60% of homes in combined regional areas were cheaper to buy than rent, compared with just 4.9% of homes in Sydney and 7.3% of Melbourne homes.
Almost all properties in regional NT (94.6%) were cheaper to buy than rent, while 86% of homes in Darwin and nearly 80% of properties in regional SA and WA were all cheaper to buy than rent.