Sad reality for people needing to rent a home.

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Sad reality for people needing to rent a home.

Over half of Australia’s detached housing markets has become unaffordable for tenants as diminishing rental supply fuels large rental price increases in many areas.

Of the 2,809 house markets assessed by Suburb-trends, 51% require families to spend more than 30% of their household income on rent.

The shocking reality for renters in coastal towns like Byron Bay sadly need about 75% of their income to pay their rent.

In 164 suburbs, households need more than half of their income to pay the rent on an average three-bedroom house, with rental prices for three and four bedroom houses rising to as high as 79% of median household incomes.

Closer to the capitals, families in Mosman on Sydney’s lower north shore are spending nearly two-thirds of their income on rent. In Melbourne’s inner suburb Toorak, families need more than half of their income to pay rent.

Units and apartments are also becoming unaffordable in a growing number of areas. In more than 21% of the unit markets, households need more than a third of their income to rent a two-bedroom unit.

“The rental shortage has hit regions the hardest. However, greater Darwin, the ACT, greater Hobart and to a lesser extent greater Adelaide are all feeling extreme pressure with very low vacancy rates and rising rents,” said Suburb-trends director Kent Lardner. Vacancy rates are currently sitting at 0.6% in Darwin and 0.8% in regional Tasmania, Queensland, Victoria and NSW, and they shrank to 1% in greater Hobart, Adelaide and the ACT.

Louis Christopher, SQM Research managing director, said rental supply was a big challenge for the regions which were experiencing large population inflow from interstate or from the cities. “It doesn’t take long for a region to reach full capacity if the population shifts in that area,” he said. “The challenge going forward is that developers won’t be able to respond by building more homes due to restrictive lending requirements by the banks, so supply will continue to shrink.”

In some metro areas, the supply of rentals was less of an issue, but the rising rents were driving many households further out of the city, said Martin North, director of Digital Finance Analytics. “There are a significant number of high-rise builds underway, so rental supply is not the main problem, but rental supply at the right price is,” he said.

“We’re seeing big spikes in rental costs as investors try to recoup losses from the COVID freeze. “Many renters are younger families with more limited incomes and cannot afford to pay more and some of them are moving further away into cheaper areas, which is putting more pressure there.”

The current undersupply of rental houses will likely worsen when the international border reopens, Mr Lardner said. “Most new arrivals will flood into the vacant units within the cities, but some will go and rent in the suburbs and regions, which are already experiencing rental shortage,” he said.