Australian Tenants Face Challenging Rental Conditions, But Relief May Be on the Horizon

New research from Oxford Economics suggests that rent rises in Australia are expected to slow down in the coming years, offering hope for tenants struggling with high prices and low vacancy rates.

Australian tenants across the country are facing challenging rental conditions, with high rent prices and low vacancy rates making it difficult for many to find affordable housing. However, new research from Oxford Economics suggests that there may be some relief on the horizon.

According to the report, rent rises are expected to slow down in the coming years, thanks to an increase in housing supply and a decrease in migration. While national total dwelling rents saw a significant increase of 12.9% in 2023, future rent growth is projected to be more modest, with an average increase of 3.2 per cent for houses and 3.6% for units annually over the next three years.

Senior economist Maree Kilroy, the author of the report, stated that these more moderate rent increases would bring the market closer to normal conditions. The report also predicts a decline in net overseas migration, which is expected to ease some of the pressure on the rental market.

Despite the easing of rent growth, Australian rental affordability has worsened over the past two years, leading to the formation of larger rental households. While interest rate cuts are expected to help ease property outgoings for landlords, it may also result in more modest rent increases for tenants.

Looking ahead, Oxford Economics Australia anticipates that landlords' rental yields will peak in early 2025 before tightening through to 2027. State governments are also taking steps to increase rental supply by targeting holiday rentals as a potential source of long-term housing.

Overall, while the Australian rental market may continue to be challenging for tenants in the short term, there is hope that conditions will gradually improve in the coming years.