Rents are soaring across Australia, with increases now well above inflation.
For many tenants, the cost-of-living crisis is crippling, especially as everyday essentials like groceries, electricity and petrol continue to climb.
But here’s the good news: if you are paying ever-increasing rent, you don’t have to just cop it. There are practical steps you can take to reduce your housing costs and even build financial momentum for the future.
But first, let’s look at what’s actually happening with rents right now.
A perfect storm
Latest data from property research group Cotality shows just how intense the rental market has become.
National annual rents have increased by 5.4 per cent, driven by an ongoing shortage of rental supply. Over the past five years, rents have surged 43.9 per cent, adding roughly $200 per week to median rents nationwide.
Vacancy rates remain extremely tight, at around 1.7 per cent … that’s about half the long-term averages.
As a result, the typical Australian tenant is now spending an average 33.4 per cent of pre-tax income on rent.
In cpital cities, median rents exceed $700 per week. Western Australia is the epicentre of the rental crunch, with rents soaring 66 per cent in five years – far outstripping even above-average wage growth – while the ACT is the only market where rents and wages have remained broadly aligned.
While regional areas are still cheaper, around $590-$600 per week, the gap is narrowing, with rents rising faster outside the city (6.2 per cent vs 4.8 per cent across the capitals).
In short, rental supply is extremely low and demand extremely high – a perfect storm that keeps rents going up and up.
While it’s unlikely to ease soon, there are steps you can take to reduce the financial sting of paying rent.
10 smart money moves for tenants
- Negotiate with your landlord
Many landlords prefer keeping a reliable tenant rather than risk vacancy and advertising costs. If you’ve been paying rent on time, looking after the property, and communicating well, ask if a moderate increase is possible.
Offering a longer lease can sweeten the deal.
- Shop around before renewing
Before signing a lease renewal, compare what else is available – even in neighbouring suburbs. Moving a few kilometres can sometimes save hundreds per month. It’s a hassle, but long-term savings, especially if you can secure a longer lease, may make it worthwhile.
- Lock in a longer lease
If you find a place you like at a decent price, ask whether the landlord will offer a 12- to 24-month lease at the current rate.
This protects you against sudden rent hikes.
- Downsize or share
Reducing space or sharing costs can significantly lower rent and bills.
These days house-sharing isn’t just for 20-somethings. I have heard of some single mums forming “mumunes”… renting larger homes together and splitting the rent, food, bills etc, and helping each other with childcare and school drop-offs.
- Look beyond the city
Regional towns and outer-ring suburbs can still offer better value than inner-city hotspots, even though demand is rising. Expanding your search might uncover affordable options that fit your lifestyle and commute.
- Up your income
Sometimes the best way to fight rising costs is to boost your earnings. This could be a pay rise, a higher-paying job, investing (carefully), or finding a creative side income (like selling unused items, side hustles, or renting out your car).
- Take advantage of government assistance
If you’re eligible, consider:
- Rental assistance through Centrelink for those on low incomes or experiencing hardship
- Local or state housing support services offering bond assistance and more (see all at myGov).
- Shave costs elsewhere
I’m not going to say stop ordering smashed avocado on toast. Australia’s housing affordability problem is about supply, not what we eat for breakfast! But trimming unnecessary expenses always helps.
Consider:
- Comparing electricity, internet, and insurance plans and getting a better deal.
- Canceling unused subscriptions (usually through your settings, not just deleting the app).
- Paying down high-interest debt like credit cards.
- Reviewing your spending using statements or budgeting apps and seeing how making even small savings could add up.
- Time your lease
Rental markets are seasonal. Winter can see lower demand than summer, which can lead to softer rent increases.
Timing your lease strategically can help.
- Plan for financial freedom
Paying off your own mortgage is always going to be financially preferable in the long term to paying rent. But even if buying property isn’t realistic any time soon, planning for it is smart.
Look into first-home buyer schemes (5 per cent deposit guarantee and state-based duty exemptions), but also ways to boost borrowing power, and start a property deposit savings plan.
It’s also worth thinking of other ways to build wealth, like investing in managed funds, rentvesting (where you buy somewhere more affordable and rent where you actually want to live), or making voluntary super contributions that come with tax benefits. There are plenty of ways to grow wealth beyond the traditional owner-occupier property path.
Claim back some power
Rising rents are tough and I really feel for tenants. Housing is now taking up more of Australians’ income than ever before.
But by being strategic and having a plan, I hope you can protect your money, reduce your stress levels around it and have a stronger financial plan for the future.
Good luck.
