House prices tipped to fall further, rents to climb higher as rate rises bite

Despite falling prices, ANZ is expecting rents to continue climbing.

Rents nationally have lifted by a record 10 per cent over the past year while the number of available properties remains extremely low by historical standards. ANZ said in the month to November 13, the number of properties for rent per week was just 96,000, down 36 per cent on the five-year average.

Loading

“With international borders open, immigrants returning in large numbers, and employment and income growth still strong, it’s difficult to see a sharp reversal of this trend anytime soon,” Emmett and Timbrell said.

Rental affordability is tumbling across the country, with the SGS Economics’ rental affordability index showing falls of up to 14 per cent in some parts of the country over the past 12 months.

Affordability is at a record low in Brisbane after an 11 per cent drop over the past year, and at its lowest point in Perth since 2016. In both Melbourne and Sydney, affordability is expected to tumble after briefly improving during the COVID-19 pandemic.

Research from Moody’s Investors Service on Tuesday said housing affordability was also deteriorating despite price declines.

It said by October, new borrowers needed 31.6 per cent of average household income to meet monthly mortgage repayments compared to 25.8 per cent in January.

“While house prices are declining, rising interest rates over 2022 and any further rate rises in 2023 mean affordability for new borrowers is poor and will remain so over the next year,” it said.

Pressed on the issue in parliament, Prime Minister Anthony Albanese said affordability was a challenge across the country that required work from all levels of government.

“What we have done is to accept responsibility for making changes that the national government can do,” he said.

Loading

Greens housing spokesman Max Chandler-Mather said the SGS report showed Australia could fall into a social crisis if rents continued to climb and wages remained stagnant.

He said the country needed national tenancy standards, including a two-year freeze on rent increases, to protect those at risk of being forced out of their accommodation.

“It’s no wonder we’ve seen families living in cars and tents when renting in cities around Australia is severely unaffordable for those on JobSeeker, single pensioners and single parents working part-time, with rents surging over 60 per cent of income in many cities,” he said.

Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.