Renters entering new leases must on average offer rents in excess of the advertised list price to secure a home, data from the Australian Bureau of Statistics shows.
Actual rents paid by new tenants increased 14% in the 12 months to February, 9% higher than the increase in the inflation index which captures rents paid by both new and current tenants, indicating a trend in landlords pounce on expired leases as an opportunity to make more money from their properties.
In its first set of rental market data released Monday, the ABS noted that while “higher rent increases [are] becoming more common for all properties”, on average “rent increases for properties with a new tenant have tended to be larger”.
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In the capital cities, rent hikes have also become larger and more common for most properties, the ABS said. “In the past year, rents have increased for nearly three-quarters of properties, compared with about a quarter each year before the pandemic.”
In February, more than 60% of properties with new tenants had rents more than 10% higher than a year earlier. In contrast, only a quarter of properties with existing tenants experienced rent increases of more than 10%.
The ABS report includes an index that captures the discrepancy between advertised rents and actually paid rents. In the early days of the Covid pandemic in 2020, actual rents agreed between landlords and tenants tended to be less than the advertised amount.
This trend has been accompanied by a shift away from inner-city rental properties towards regional areas as “lockdowns and health issues have left many Australians wanting more space and living with fewer people,” the ABS said.
At the same time, the average number of people in each household has declined, which has contributed to around 120,000 more households across the country.
As Covid restrictions ease and health concerns ease and the trend towards living further away from city centers reverses, the ABS has observed a tightening in the rental market.
“More recently, the return of international migration – and, in particular, the return of international students – has added to the demand for rental properties in major cities. Advertised rents have grown strongly and finding a suitable rental property has become more difficult as vacancy rates have fallen,” ABS said.
As a result, “the rents paid by new tenants increased … because the actual rent agreed between landlords and tenants was on average higher than the advertised amount,” the report said.
Laws attempting to limit rental bids vary from state to state, but there are concerns they don’t go far enough in preventing the practice. In New South Wales, Labor stood in elections in March with a policy that if a tenant wishes to offer more than the list price, that offer must be communicated to all applicants so that they have a “chance to match the offer”.