‘The property boom’ is driving rents up, experts warn

Property investors are bracing for a surge in rental prices as the world’s most populous country sees record-breaking property prices.

The median price of a home in Australia was up 14.4 per cent to $1.9 million in March, the highest since August 2012, according to a report released on Wednesday by the Australian Real Estate Association (AERA).

Renters in Sydney, Melbourne and Perth had the highest rents of any major metropolitan region, rising to $4,600 from $2,400 a month in March.

In Sydney, the median price for a two-bedroom flat was $1,900, up from $1 for the same unit in March 2017, according the AERA.

While the average rent in the CBD rose 1.1 per cent from March to $2.70 a week, the average price for detached houses rose 1 per cent, to $3,500, the report said.

“In the outer-west, prices are increasing faster than median income growth, so renters in the inner-city have been left out of the rental market for the first time since the financial crisis,” said AERA president John Cairns.

Cairns said rents in many areas were still “under pressure” and the AEA warned that prices would “continue to rise”.

“While the rental affordability crisis has ended, affordability is not a fixed concept.

Rising rents have a ripple effect on all types of consumers and communities, especially those who have experienced the most rapid growth in rent,” he said.

In NSW, the proportion of households living in rental accommodation dropped by almost a third, to 19.4pc, to 2.2 million households.

In Victoria, the percentage of households renting rose to 7.3pc from 5.8pc, and in Western Australia, the share of households in rental units rose to 10.6pc from 7.6%.

Rental housing has been booming in Australia since the global financial crisis in 2008.

It has helped fuel Australia’s booming economy, which has helped drive more than $20 trillion in wealth.

In March, Australia had the world second-highest number of millionaires, after the United States, with 7.4 million people.

A total of 3.6 million Australians were millionaires, according a report by Credit Suisse released on Thursday.

Rents are expected to rise for the second consecutive month in Melbourne, according an AERA report.

Prices for a one-bedroom apartment in the capital rose to $750 a week in March from $375 a week a year earlier.

Melbourne’s median price rose 10 per cent over the past year to $920,000, while in the Sydney CBD it rose 12 per cent year-on-year to $935,000.

Rents in Sydney were up 9 per cent in March compared to March 2017.

Queensland, which also has one of the world, fastest-growing economies, recorded a 12.6 per cent increase in its median rental price in March to about $1 million a month.

Tasmania recorded a 20 per cent drop in its rental prices to about 50,000 a month, with a median price around $1million a month rising 4.3 per cent.

There were no significant changes in prices across the rest of the country.

However, the Aera said Queensland’s median rental rate of $1200 a week would rise to $831 by the end of 2020.

“These increases will push rents to the extremes, with many renters seeing their rents rising by as much as 20 per to 30 per cent,” it said.