In the newest gloomy development of our nation’s harsh rental market, real estate brokers are utilizing unusual tactics against needy rental applicants by forcing them to ‘bid’ on properties.
Since the beginning of 2022, rents in Australia have increased by an average of 10.3% due to a lack of housing and the reopening of borders, both of which have contributed to the rental crunch.
In some places, landlords and agents decide who gets a property based on’rent-bidding,’ when applicants give additional cash or rent months in advance to secure a residence.
Leo Patterson Ross, chief executive officer of the Tenants Union of New South Wales, told 7News, “It is a well understood premise that the fair market value is the price that willing but unconcerned parties to a transaction would pay.”
He stated that this notion was increasingly being questioned as tenants ‘fronted with homelessness’ grew concerned about their ability not just to finance, but also to locate a suitable rental property.
Tenants have resorted to calling agents to offer extra incentives to move their application to the top of the stack, such as paying additional rent or months of rent in advance.
Tim McKibbin, director of the Real Estate Institute of New South Wales, remarked, “We’re seeing a lot more rental bidding.”
It does occur during periods of lower vacancy rates, but it is intensifying. They may be giving greater discounts for the week or in advance.
Australia’s rental market is more competitive than ever, with hundreds of prospective tenants waiting in line in the nation’s big cities.
According to statistics from Domain, the national rental vacancy rate has reached a record low of 0.9%.
A recent photograph shot in Bondi, in Sydney’s eastern suburbs, showed prospective buyers in line to examine a house.
Victoria, Queensland, and Tasmania prohibit landlords and real estate agents from accepting bids above the listed rental rate, although other states and territories are more lenient.
As long as property advertisers do not make deceptive comments, such as falsely saying another applicant has offered a greater price, NSW Fair Trading advises that they may accept a higher bid.
In certain competitive markets, such as Sydney and Perth, rent costs have likely increased by a greater amount than estimated by officials.
According to data firm PropTrack, 41.8% of advertised rentals on realestate.com.au in Australia were less than $400 per week at the start of 2020.
In September of this year, though, that percentage had plummeted to 19.3%.
In September, 16.4% of capital city rental postings were under $400 per week, compared to 36.1% in March 2020.
The typical house rent increased to $640 per week in Sydney during the September quarter, while the median unit rent increased to $520 per week.
Cameron Kusher, director of economic research at PropTrack, stated that the solution to the problem was to increase house construction and market supply, hence relieving pressure.
Mr. Kusher anticipates that the market will become even more competitive prior to the completion of a number of upcoming large-scale housing developments across the country.
The administration of Albanese will spend $350 million on 20,000 affordable homes, co-investing with super funds and institutional investors and collaborating with the states and territories to increase market supply.
Over the next five years, a Housing Australia Future Fund would deliver an additional 30,000 social and affordable houses.
Both initiatives are included in the government’s bigger ambition to construct one million “well-located” homes by the end of the decade.