Estate agents are forcing desperate rental seekers to ‘bid’ on homes in the latest shady development in Australia’s cutthroat rental market.
On average, rents have soared 10.3 per cent in Australia since the start of 2022 with low housing supply and the reopening of borders contributing to the contraction.
But there’s not a level playing field for all applicants: Landlords and agents in some regions now often decide who gets a property based on “rental deals,” where applicants offer extra money or pay rent with months of advance to secure a home.
“There is a generally accepted principle that fair market value is the price that willing but not eager participants in a deal would make,” said Tenants Union of NSW chief executive Leo Patterson Ross. 7News.
Hopeful renters are turning to paying agents and landlords well above advertised prices to secure a property (stock image)
He said the principle was increasingly being called into question as renters ‘facing homelessness’ became concerned not only about their ability to pay, but even about being able to find a house they wanted to rent in.
Tenants have resorted to calling agents to offer extra incentives to get their application to the top of the pile, including paying extra rent or paying months in advance.
“We’re certainly seeing a lot more rental offers,” said the head of the Real Estate Institute NSW, Tim McKibbin.
‘It comes up in periods of tighter vacancy rates, but it’s getting more intense. They could be offering more for the week or more in advance.
Australia’s rental market is more competitive than ever, with hundreds of hopeful renters lining up in the nation’s capital cities.
The national rental vacancy rate is at an all-time low of 0.9 percent, according to Domain research data.
A recent photo taken in Bondi, in eastern Sydney, showed applicants queuing outside a house to inspect it.
This photo of a crowded open inspection in Bondi (pictured) sums up Sydney’s dire rental crisis, where desperate tenants compete for properties.
Sydneysiders have shared some of their experiences in the increasingly tough rental market (pictured: comments in a Facebook community group)
While Victoria, Queensland and Tasmania prohibit landlords and estate agents from accepting offers outside of the advertised rental rate, other states and territories are more relaxed.
NSW Fair Trading advises that as long as property advertisers do not make misleading claims, such as falsely claiming that another applicant has offered a higher price, then they can accept a better offer.
With the parallel offers taking place, rental prices are likely to have risen more than authorities estimate in some competitive markets such as Sydney and Perth.
According to research firm PropTrack, at the beginning of 2020 there were 41.8% of rentals advertised on realestate.com.au for less than $400 per week across Australia.
But by September of this year that figure had dropped to just 19.3 percent.
Rental listings in the capital city below $400 per week were down just 16.4 percent in September compared to 36.1 percent in March 2020.
In Sydney, weekly rental prices increased by an average of 10% year-on-year in the September quarter, with median house rent rising to $640 and median unit rent rising to $520 per week.
NSW’s main body for housing policy, Shelter NSW, previously told Daily Mail Australia that applying for rental properties has become ‘like The Hunger Games’ (Pictured: Bondi)
A long line of prospective renters winds down the side road of a Sydney street hoping to see a $700-a-week two-bedroom rental property in the eastern suburb of Clovelly
Cameron Kusher, director of economic research at PropTrack, said the answer to the problem was to build more homes and get more supply on the market, thereby relieving the pressure.
There are a number of large housing projects in the pipeline across the country, but until they hit the market, Kusher said he expects the market to become even more competitive.
The Albanian government will spend $350 million on 20,000 affordable homes, co-investing with superfunds and institutional investors and working with states and territories in an effort to get more supply on the market.
A Housing Fund for Australia’s Future would provide a further 30,000 social and affordable homes over five years.
Both are part of the government’s broader plan to build a million “well located” homes by the end of the decade.