By Graeme Salt
Extract taken from realestate.com.au/insights
In all of Australia’s capital cities, rents have outgrown wages.
Perth has had the largest increase in rents relative to wages, with rents increasing by 80 percentage points more than wages. That increase has placed significant pressure on household budgets, as wages have not kept pace. The proportion of household budgets allocated to rents in Perth has increased since the start of the 2020s.
On the other hand, Canberra has had the most balanced rental growth relative to wages, with only a small 3.1 percentage-point difference since January 2020 until the end of March. This means that rents relative to wages in the nation’s capital have stayed quite consistent.
The ACT’s wages are mostly public sector-driven, but rental growth has remained modest compared with the rest of the country.
Melbourne remains the most interesting housing market over that period, as migration trends shifted and affected demand for dwellings, while Victoria maintained slower wages growth than other big states. Keeping the city among the more affordable in the nation.
Sydney has stayed in the middle of the pack of the capitals, though coming from a higher base prior to this decade.
Brisbane, Adelaide and Darwin all experienced similar growth differences between rents and wages, with rents rising by over 40 percentage points over the period. This generally tracks with these midsized capitals’ price growth more broadly.
This growth has meant that rental affordability has continued to worsen nationally, with no clear end in sight.
Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan needs, please contact him on 02 9922 5055.
