“The proportion of income required to meet rent payments decreased to 23.3 per cent in the quarter, a decrease of 0.4 percentage points over the quarter and down 0.5 percentage points compared to the same time last year,” said REIA president Adrian Kelly.
“Rental affordability has not been this high since December 2007, a positive for renters in these COVID times.”
The data reflects a reduction or stabilisation of rents during the June quarter across most states. Queensland tenants are enjoying better conditions than the national average, with the proportion of family income required to meet median rent decreasing to 21.5 per cent.
But new data is predicting a bounce in rents as investors exit the market, leading to a future undersupply of rental accommodation.
Buyer enquiry on realestate.com.au is up a whopping 70 per cent since the pandemic hit mid-March, driven in particular from first home buyers.
By comparison, enquiry from the investor segment has dropped by almost 30 per cent.
“While the oversupply presents an opportunity for tenants to broker a bargain, if mum-and-dad investors — who provide almost all rental housing in Australia — continue to wane, the country could be faced with a rental property shortage, and ultimately, a sharp rise in rents,” writes Nerida Conisbee Chief Economist for realestate.com.au.
She notes that COVID was just the latest setback to hit the investor market. The 2017 Royal Commission saw investor lending tightened, then the 2019 federal election shook investor confidence with potential tax changes. Foreign investors were also hit with additional costs including extra stamp duty.
This is all great news for first home buyers who are enjoying a free run while investors sit on the sideline. It’s also good news for tenants because right now, the rental market remains in their favour.
But Ms Conisbee predicts future rental shortages if investors aren’t encouraged back into the market.
“Encouraging investors back to market is likely to be hard work at the moment, but it could be achieved with better financial incentives from governments, including access to grants such as HomeBuilder as well as stamp duty exemptions,” she said.