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Sometimes, being a renter in Australia just plain sucks.
You might be forced to move over and over again, unable to secure a long-term lease. You might be waiting months for repairs, only to get the "landlord special". Maybe, like many in Australia, you've had your rent hiked by an eye-watering amount.
Perhaps you've needed to make a drastic change, like 44-year-old Stephen Papadopolous, a renter of 20 years, who recently moved back in with his parents after his landlord sold his apartment of five years in Sydney's Dulwich Hill.
"I absolutely love the area, I have so many friends close by," he says. "I tried looking close by in the Inner West for apartments and went to a few open inspections, and the queues and the crowd that turned up was just crazy.
"For five years, I was renting a two-bedroom apartment on my own for $400 a week with no rent increase, and then to have to go find one-bedroom apartments for over $600 was a bit of a shock."
He's now living in his parents' Campbelltown home, on the outskirts of metropolitan Sydney, and is in no rush to rejoin rental inspection queues. "I would never rent again," he says. "My plan is to save some money while I don't have to pay anything living with my mum and dad and buy a place because it's just so unpredictable."
Across the housing sector, from renters to real estate agents and landlords, there's broad agreement that Australia's rental system needs an overhaul — and fast. The problem is, few agree on what that change should look like.
CoreLogic's head of residential research Eliza Owen says in this "landlord's market", requests for homelessness services have been increasing every year since 2012. "The rental system has to change," she says.
Leo Patterson Ross from the Tenants' Union of New South Wales describes the market as "broken". "It does not achieve what should be its primary purpose of delivering good homes to people in the areas that they need it and with the size and quality that they're looking for."
And while he doesn't agree with Patterson Ross on the solutions, Real Estate Institute of Australia President Hayden Groves agrees we have a problem: "There is no doubt right now we are in a rental crisis."
"We don't have enough rental properties to go around, and this shortage of supply in the rental pool is causing rents to rise very rapidly."
So, how did things get so bad — and what, if anything, can be done to fix it?
Affordability is worsening
For more than 15 years, CoreLogic's estimates of median rent values in Australia had been trundling along at a relatively slow pace, growing by, on average, 2 per cent a year in the 2010s.
At the start of the pandemic, advertised rents even fell a little. But any fall has been dwarfed by a rapid rise since late 2020.
There's a clear hinge point in September 2020, where rents started to shoot up.
"Prices didn't fall anywhere near as much as you might have expected given the circumstances, and their return has been incredibly rapid," Patterson Ross says.
"But those price shocks didn't apply everywhere equally … the fringes of Sydney never saw a drop in prices but have seen the massive increases in rents."
In fact, in the past two and a half years median rent values have risen by as much as they did in the entire 13 and a half before that.
That's had a big impact on rental affordability, measured by looking at how much of a typical income you would need to spend to pay your rent.
One common way of assessing rental affordability is through what is often dubbed the 30 per cent rule: a home is affordable if you're spending less than 30 per cent of your income on rent.
It's not a perfect rule and makes more sense for low-income earners than the wealthy, but according to CoreLogic's estimates, most renters are now sitting above that threshold.
"Lower income households are more likely to be in the private rental market [and] they're seeing much higher levels of incomes required to service rents," Owen says.
It's a relatively rapid change, reversing most of a decade's worth of improvement.
Rental properties are less affordable in regional areas than in the capital cities, and regional areas have seen some of the biggest price spikes.
Since March 2020 some parts of Australia, particularly in Western Australia, have seen rent values rise as much as 50 per cent.
In parts of Sydney, Brisbane and Adelaide, rent is up by as much as 30 per cent.
It's about demand
Demand for homes will inexorably creep up as long as our population is growing, but two pandemic-related shocks have piled on significant extra pressure.
As lockdowns became a fact of life, and anyone who could work from home was encouraged to, the number of people living in each house fell from about 2.55 to an average of less than 2.5.
That fall in household size might seem minuscule, but it's a national average and the Reserve Bank says it meant roughly 120,000 new households were formed.
That rejigging and splitting up of homes created new demand equivalent to about 70 per cent of the homes that were completed in Australia in 2022, according to dwelling completion data from the Australian Bureau of Statistics.
Real estate agent Angelo Lofitis says he's seen a lot of people who have been looking for new ways of living. "They want either more space to work at home, or they want to live separately, where they used to live together," he says. "So there's a definite change in styles of accommodation that were required post-COVID."
Owen says people living in share houses in particular faced additional stress. "People were making these decisions around who they really wanted to live with," she says.
Then a surge of new residents entering Australia once border closures were lifted in 2022 created even more demand.
"We saw a big catch-up in overseas migration," Owen says. "Other factors have boosted net overseas migration to quite extraordinary levels … you've got this unusually large surge in overseas arrivals to Australia which is further compounding rental demand."
It's also about supply
Loads more demand has come at a time when there are fewer houses coming on to the market than we've seen in a very long time.
CoreLogic observed half as many new rental listings in April this year than it had seen three years earlier.
And the national vacancy rate — in short, the share of rental properties that are unoccupied at any given time — has fallen to about 1.3 per cent from an average of 2.9 per cent last decade, according to CoreLogic.
"The current vacancy rates in Sydney are lower than I've ever seen in 30 years," Lofitis says.
It means desperate rental hunters are repeatedly met with crowds of other hopefuls at house inspections.
“We had 40 groups inspecting, obviously that can only go to one group, and it’s hard to see 39 groups not get approved," Lofitis says.
"I'm hearing from tenants that they're finding it hard to get any properties within their budget that they're interested in renting."
"If they're finding properties that are suitable for them, it's out of their budget."
It's quite a turnaround from the apartment boom years of the mid-2010s when we saw record investment in new buildings that helped put a cap on rental growth.
"Throughout the 2010s, Australia had structurally declining interest rates and quite favourable terms for investors that had been introduced over the decades," Owen says. "That really contributed to a surge in new apartment development."
But where there's a boom, there's often a bust lurking around the corner — that came toward the end of the decade.
"We started to see investors dropping out of the market quite heavily and that was in response to changes in lending conditions because the mortgage market was being exposed to more risk," Owen says.
Then came the pandemic. "You've had an increase in freight costs, material costs, labour shortages … that's reduced the delivery of new rental supply as well."
And the number of new dwellings in the pipeline, approved but not yet completed, has been falling for years.
"In the short term I think we're going to face another challenge with the new supply of housing and that's because dwelling approvals have been trending lower as interest rates have risen," Owen says.
"There's a lot in the construction pipeline right now but when that's complete, I think you're facing a bit of a vacuum of new projects for 2024."
In the short term, what's a renter to do?
"There's not much happening in the supply response, so it's got to be tenants taking things into their own hands," she says.
"That does look like share houses reforming … for some it might also be trying to hold on to their current lease for longer rather than battle it out looking for a new rental."
Beyond the pandemic
It would be easy to just blame the pandemic for our housing woes and call it a day.
Most of those pandemic factors will eventually recede back to historically typical levels, causing rents to fall back into line.
Indeed, that's already starting to happen.
"We've already seen annual growth in rents start to drop off from a peak of about 10.2 per cent at the end of last year to 9.4 per cent in the 12 months to July," Owen says.
"Rental pressures are probably going to start to ease up a bit in 2024.
"I really hope that doesn't mean that we let go of this conversation, and rights for tenants and the provision of social and affordable housing, because if we do have a shock in the future, we don't want to be going through something like this again."
Analysts, renters and real estate agents agree that a change in the makeup of the rental market has meant we've lost some of the cushioning we once had for these kinds of shocks.
The majority of rental properties are owned by landlords with just one investment property.
The other big owners of rental properties are governments, but those homes are a shrinking slice of the market.
In the 1980s, as many as one in 10 homes being approved to be built were owned by governments as public housing. That's fallen to just two per cent of approvals each year.
There was a brief spike in new public approvals under the Rudd government, largely due to a stimulus package in the wake of the global financial crisis.
There's broad agreement that's been a mistake. Hayden Groves, who represents real estate professionals, says Australia needs a more diverse market.
"We need to stop being so reliant on just mum and dad investors to supply the rental stock," he says.
Patterson Ross says Australia's failure to grow the public and community sector "has been a really bad mistake on behalf of parties of both stripes for many, many decades".
"We know looking around the world that comparable economies, comparable societies to ours have much higher rates of social housing."
The Australian Housing and Urban Research Institute estimates that 29.1 per cent of Netherlands properties are social housing, nearly a quarter of homes are publicly owned in Austria, 21 per cent in Denmark, and 17 per cent in England.
In Australia, it estimates the number is 3.8 per cent.
Some analysts say that's one of the big reasons we've seen such a big pandemic-related shock now.
The argument is that social housing has historically been a safety net for low-income people, helping reduce the impact of housing market fluctuations on those most vulnerable to them — but that net now has some gaping holes.
"We've seen an increase in social housing waitlists, which are now well over 100,000 nationally, so clearly we just need that housing to be directly supplied," Owen says.
"We can't be subject to the kind of volatility and increase in homelessness that we've seen over the past few years.
"We need to change the way we think about providing rental housing so that we don't get into this kind of situation again."
Patterson Ross says Australia should aim to reach a point where public housing makes up at least 10 per cent of all housing stock.
"That's the level at which we're starting to meet the needs of the people who aren't currently being met … and providing a level of competition across the market."
Can the market fix it?
The rental market is a big and complicated beast, and no single measure to boost supply is going to be a permanent fix to worsening affordability.
Indeed, tenants' advocates would argue that the market we have just isn't capable of delivering what renters need: stable, adequate, affordable housing.
"We've seen ebbs and flows of a crisis over many decades, but really we have gotten used to a poorly run renting system," Patterson Ross says. "This has been a long time coming."
Recently, the Greens have seized on the growing discontent and have launched a push for increased renters' rights, including a freeze on rental increases.
The federal government has so far resisted calls to freeze rents, but Prime Minister Anthony Albanese says a "better deal for renters" is on the way after state and territory leaders agreed to a new target of 1.2 million new homes to be built.
The national cabinet also pledged to move to nationally consistent rules requiring reasonable grounds for eviction, limits on rent increases to once per year, and a phasing in of minimal rental standards.
While it falls short of what the Greens were hoping for, the past year has demonstrated the increased electoral power of renters — roughly a third of all Australians rent, according to the ABS — and their growing involvement in the conversation.
The tone of the conversation has Patterson Ross more optimistic than he has been in the past, but he says it can't just be about supply and demand.
Doing the same thing over and over again and expecting something different to happen. Are we talking about madness, or the Australian property market?
A decades-old problem with no easy fix
The way that Australia's market has evolved over decades has left us with a market where most rental properties are owned by small investors.
"We have had generations of family investors supplying affordable rental accommodation for Australians for an awfully long time now," Hayden Groves says.
"To unravel that and unpick that in a comprehensive way is going to take an equal amount of time, perhaps generations, to do so effectively."
The trouble is that all the players in the sector have different financial stakes in the market, and therefore different views on precisely what it is that must change.
Take proposals for rent caps, for example. While many renters believe they are an essential step to halt a spiralling crisis, investors who bought into a rental market operating under one set of rules may feel like changes that limit their returns are unfair.
"We have to stop biting the hand that feeds us, and the hand that's feeding us right now is the mum and dad investors," Groves says.
Tenant advocates say that's precisely the problem. "Houses are being treated as an asset," Patterson Ross says.
"The right to make an income off that property needs to be balanced against people's need for a home. That's where we've gone wrong."
This is the first article in a series looking at Australia's rental market and how we stack up against the rest of the world. You can watch What Broke The Rental Market? now on ABC iView.
Credits
Words: Casey Briggs, with additional reporting by Angelique Lu
Production: Maani Truu
Graphics: Gabrielle Flood
Photography: Billy Slater, Jack Stevenson, Geoff Kemp