Increasing rents boosted the housing component of the Consumer Price Index (CPI) by 0.9 per cent for the quarter and the overall annual increase to 5.5 per cent, that’s according to Australian Bureau of Statistics figures released this week.
The CEO of Real Estate Institute of Australia has said, “The majority of this increase in the housing component was driven by rents, which increased nationally by 1.7 per cent over the quarter and 8.4 per cent over the year. The cities where rents increased the most were Perth and Darwin with annual increases of 10.9 per cent and 13.5 per cent respectively!”
This rent increase in the recent quarter reflects low vacancy rates and the scarcity of rental properties across capital cities, combined with the decrease in building approvals and housing finance for investment.
The National Rental Affordability Scheme should hopefully relieve this figure, however the impact won’t be felt for quite some time.
“With an underlying demand for additional housing at around 200,000 dwellings per year and commencement of new dwellings of 147,000 in 2008, Australia will need to build significantly more homes than what has occurred to meet the rental demand.”
Housing affordability improved since the Reserve Bank rate cuts, although there’s been very little flow-on benefit to those in the rental market.
“With lower interest rates and greater affordability, now’s the time for those within the rental market to seriously consider purchasing their own home.”