EVIDENCE of a slowing growth in Newcastle rental prices may be bad news for investor landlords, but it will be welcomed by those Novocastrians paying rent.
As the Newcastle Herald is reporting on Monday, Housing NSW figures show only modest increases in rental prices, with the average rent of a detached home in Newcastle rising only $20, to $420, since the start of 2015.
Yet over the same time, the purchase price of Newcastle housing has risen dramatically, increasing by some 40 per cent over the past four years. Suburban records are being broken seemingly every week, thanks mainly, it would seem, to the belief that our historically low interest rates are here to stay, encouraging borrowers to take on far more debt than would have been thought wise a generation or two ago. While most economic commentators seem relatively at ease with our levels of indebtedness, it would only take a rate rise of a couple of percentage points to put numerous Australian households under more mortgage stress than they are already – investors and owner-occupiers alike. In the meantime, meeting the cost of renting is a problem for the less well-off in our community, especially, as various welfare agencies attest.
A recent Samaritans survey found a decrease in the number of affordable rentals in the Newcastle market, despite there being more properties available to rent. The Samaritans say housing affordability stress is one of the top three reasons that people have sought its support over the past year. The organisation points to various pieces of evidence, including the latest Australian Bureau of Statistics Household Expenditure Survey, to argue that the cost of living is well and truly on the rise, with housing costs a major contributor.
In a similar light, a recent rental affordability index report by SGS Economics and Planning found that regional NSW had “moderately unaffordable” rents, consuming 28 per cent of average household income.
In the short term, it may be well be that the “discovery” of Newcastle by outside investors has led to enough new properties being brought onto the market to give renters more of a choice across their real estate agent’s counter.
But with census figures showing steady declines in the great Aussie dream of home ownership, the rental market is for many a place of necessity rather than choice.