I think I know why the rental market is so unusually tight…
The political atmosphere is feeling pretty charged right now, wouldn’t you say?
Things are getting hectic.
And look, I don’t blame anyone. These are very challenging times. It’s tough enough being stuck in lockdown, let alone wondering whether society as we know it is coming apart at the seams.
It’s a pressure cooker.
But this might actually be having a strange impact.
It may be partly responsible for the current property boom.
Think about it.
Right now, the rental market is incredibly tight. SQM research reckon the vacancy rate is the lowest it’s been in a decade at just 1.7%:
And that’s a figure largely being held up by the high-rise sectors in Sydney and Melbourne. Everywhere else, the numbers are just crazy. 0.9% in Perth!!
And that’s causing rents to surge, according to SQM:
Over the month to 12 August 2021, national asking rents rose 1.3% for houses to $526 per week Units rose by 0.5% to $420 a week…
Capital city rents also rose by 0.5% for houses over the past 30 days and are up by 8% over the past 12 months…
Rents for houses in some cities have recorded stunning increases over the year, with Brisbane up by 11.2%, Perth up by 12.9% and Darwin up by 25.3%.
CoreLogic is telling a similar story. They have rents growing at a thumping 7.7% over the year to July.
But this is a puzzle. Why is the rental market so tight?
It’s not what you would have expected. The Aussie population is about 200,000 people smaller than it would have been if Covid hadn’t hit.
So that should have seen rental demand fall, not go up.
SQM Research’s managing director Louis Christopher notes the puzzle:
“Current tight rental vacancy rates are driving up rents across Australia. It is somewhat perplexing to see both regional Australia and the Capital cities record surges. Given the ongoing international border closures and still relatively high completions, the national rental market should be at least more balanced. That may well still happen if lockdowns persist through to Summer as it is likely many people living in Sydney and Melbourne may attempt to move elsewhere.
“It is also possible that long term leasing is becoming very challenging for landlords due to rental moratoriums etc. We believe instead that landlords may increasingly be using short term accommodation websites such as Airbnb and Stayz whereby they have a greater say on who occupies their property and the length of time they stay.”
But I wonder if it might just be the case that people want to get away from each other.
If you’re stuck in lockdown with your parents or your housemates, that might get to you after a while.
You might be very motivated to strike out on your own and form your own household.
And if enough people do that, then you have a surge in rental demand.
It’s the “I hate you” property boom.
Covid hey? Never a dull moment.