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Regional house prices soaring due to COVID exodus from cities but some locals now living in cars

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Australians are swapping European holidays for new coastal homes but it’s causing problems in some areas where locals are being forced out of the market.

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Central West locals take in strangers as housing crisis escalates

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Central West locals take in strangers as housing crisis escalates

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The current situation has seen a new type of client who is employed but unable to obtain a rental,"

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"We need to be able to have the supply side of the housing market respond quickly when population growth changes, and if we can't do that then we'll have big movements in rents and housing prices.

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"We need to be able to have the supply side of the housing market respond quickly when population growth changes, and if we can't do that then we'll have big movements in rents and housing prices.

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When Celia McDonald was told her rent was being raised by $150 a week, she knew she had to find a new place.

Low availability and the rising cost of rentals means many are struggling to find housing

The owner of a property management company says the rental crisis is the worst he has ever seen

Agents cannot invite rent bidding, but some applicants are offering more than the listed price to secure a rental

"I just found that quite an unreasonable increase," the 35-year-old said.

"Even if I could afford that amount, I would be in a much nicer place than what I'm in currently."

However, the search for a new home has not been easy.

When she went to one inspection, she was shocked to find more than 200 people lined up to view the place.

Ms McDonald said the agent told her she had "never seen anything like this".

She has also noticed some places being rented out before the first inspection had happened, so she has shifted tactics.

"Obviously, places are taking applications before they're viewing," she said.

"So I've started doing that now - I'm applying for places I haven't seen."

The housing struggle is being felt around the country, as rental prices skyrocket and vacancy rates plummet.

Data from CoreLogic released this month showed the median cost of a rental in Australia went up by 10.2 per cent in the space of a year, a record high. In Melbourne, rents went up by 9.6 per cent.

The data also showed the rental vacancy rate in Melbourne was 1.1 per cent in December last year, compared to 3 per cent at the same time 12 months before.

Tenants union seeing 'unprecedented rent increases'

The shortage explains why someone such as Ms McDonald - who is a strong applicant on paper - is struggling to find a rental. She has good rental history, savings, and a full-time job as an executive assistant.

"In the back of my head I'm like, 'Do I actually contemplate moving back with my dad while I keep looking?'" she said. "It's brutal out there at the moment."

Tenants Victoria's community engagement director, Farah Farouque, said even people with stable incomes and decades of rental history were not having any luck.

"We're seeing people applying for dozens of homes and not having any success," Ms Farouque said.

"They're also negotiating, in some cases, unprecedented rent increases, which makes staying in the house that they're renting pretty challenging."

She said the tenants' union was being swamped with calls from struggling renters, and it was unable to keep up with demand.

Melbourne property manager says rental crisis worst he's seen

Jacob Visser - who runs a property management company in Melbourne - said rental availability was the worst he had seen in more than 10 years working in the industry.

"I've never witnessed, or experienced, the levels of crisis we are currently seeing," he said.

As a tenant himself, Mr Visser had been considering moving into a new rental, but has now changed his mind.

"I've sort of disregarded that idea, because it all seems too hard and too competitive," he said.

"I would consider myself a strong tenant, but I still wouldn't risk moving in this market."

Mr Visser said his company was receiving 20 to 30 applications per property.

A few years ago, he noted, it was around five to 10 "for a reasonable quality home".

He said that 90 people came to a recent inspection.

Some applicants were offering higher than the advertised rent, he said, which could result in prices being pushed up for everyone.

"Tenants are desperate - really, really desperate," he said.

It is illegal for property owners and managers to invite rental bidding, but the law does not stop them accepting a higher offer from an applicant.

Consumer Affairs Victoria has been made aware of 44 instances of illegal rent bidding since the new laws took effect in March 2021.

Prospective tenants trapped in 'bidding war'

Melbourne resident Sophie was shocked to find her successful application for a rental was overturned when someone else made a better offer.

"The person offered $100 more than the listed weekly price, so they gave it to them," she said.

"I've never heard of the concept of a bidding war for a rental, let alone $100 a week."

Sophie and her partner have applied for 15 rentals since the new year, with no luck.

Despite a combined yearly income of more than $100,000, the couple has started offering more money than the asking price, just so they can get a look in.

"It sort of puts us in a corner," Sophie said.

"We've just had rejection after rejection, it's not looking good."

The couple had hoped to buy their own home soon, but Sophie said the steep price tag on their current rental and those on the market was making home ownership unachievable.

"That's sort of out the window in the meantime," she said.

Situation 'going to get worse before it gets better'

Tenants Victoria welcomed changes to the state's rental laws that came in in 2021, but now the union wants the state government to cap rent increases.

"We do have some of the most progressive rental laws in Australia but, when it comes to calculating rent increases, our rental laws and regulations have nothing to say," Ms Farouque said.

A Victorian government spokesperson said new rental laws ensured rent increases were restricted to once every 12 months.

"We've also introduced more than 130 rental reforms to strengthen renters' rights, better protect vulnerable renters and enable people to turn the house they rent into their home," they said.

"We are supporting Victorians through our affordable housing rental scheme, the $1.6 billion Victorian homebuyer fund and tax incentives to support build-to-rent developments."

Joey Moloney - a housing expert with the Grattan Institute - said government investment in affordable housing could help solve the crisis, as rental supply failed to keep up with demand.

"There's fewer properties available for the [number] of people [who] are looking for somewhere to live," he said.

Mr Moloney said construction times for new homes were blowing out, due to supply issues, meaning not enough homes were being built.

On top of that, he said, more people were wanting to live alone and migration numbers were returning to normal.

He said the crisis was playing out around the country, including in the regions where many decided to move after COVID-19 lockdowns.

"There are pockets of regional areas which seem to be faring even worse than the major capitals," he said.

He welcomed the federal government's housing accord, which will deliver more affordable housing around the country.

"Ultimately, the only thing that can fix this in the long run is a supply-side response," he said.

"It's going to get worse before it gets better."

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Sophie's rental application had been accepted, then someone offered an extra $100 a week

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When Celia McDonald was told her rent was being raised by $150 a week, she knew she had to find a new place.

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The rental crisis may see homelessness riseThere are concerns homelessness will rise if Australia's housing crisis is not addressed soon.

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The rental crisis may see homelessness riseThere are concerns homelessness will rise if Australia's housing crisis is not addressed soon.

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It'll get worse before it gets betterThe expectation now is that, without significant policy intervention, Australia's housing crisis is set to worsen.

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It'll get worse before it gets betterThe expectation now is that, without significant policy intervention, Australia's housing crisis is set to worsen.

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House rents at record highs across all capitals

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House rents at record highs across all capitals

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'Bidding wars' for rental homes becoming more frequent

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'Bidding wars' for rental homes becoming more frequent

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because of increased house prices, lessens the chance that poor people can buy a house

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"Tenants are desperate — really, really desperate,"

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"Tenants are desperate — really, really desperate,"

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- Jacob Visser, CEO of property management company

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Inner Melbourne is most affected by the housing crisis 

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Inner Melbourne is most affected by the housing crisis 

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because of its increasing population

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Median cost of rental homes in Australia went up by 10.2%

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Median cost of rental homes in Australia went up by 10.2%

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According to data from CoreLogic

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In Melbourne alone, rent prices went up by 9.6%

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In Melbourne alone, rent prices went up by 9.6%

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Regional house prices soaring due to coronavirus exodus from cities but some locals now living in cars

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Regional house prices soaring due to coronavirus exodus from cities but some locals now living in cars

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Buyers from Melbourne and Sydney are buying and renting out regional places which is pushing prices up by almost 15% in some places. This is forcing regional renters out of their homes and making them live in cars