Tenants paying more for long-term leases:

While rent growth across the broader market has started to stabilise, approaching affordability limits after two years of sharp increases, demand remains high. Adelaide’s exceptionally low vacancy rate of 1.05%, compared to the national average of 1.34%, supports this.

At TOOP+TOOP over this past month we have noticed that properties priced under $650 per week remain particularly sought after, with strong demand in the north-east and eastern suburbs. These homes and units consistently receive 60% more views on realestate.com.au compared to higher-priced properties, reflecting the financial constraints many tenants continue to face.

This demand has led to a notable reduction in days on market for our sub $650 per week properties. In fact, many are being leased via our Early Release Platform, with one property being leased off-market every six days.

Interestingly, despite many tenants nearing their financial limits, we have noticed that many are offering higher rents to secure a 12-month or longer leases rather than periodic agreements. This observation aligns with broader market research undertaken by the Australian Housing and Urban Research Institute. They found that many tenants are willing to pay more for long-term security and quality housing, detailing that this shift reflects growing belief among renters that homeownership is increasingly out of reach.

The sales market’s influence on the rental market:

This shift in tenant behaviour is closely linked to the challenges in the sales market. Throughout October, stock levels rose while buyer activity declined sharply. Auction clearance rates dropped below 60%, and nearly 30% of suburbs saw house values fall, reflecting the pressures of high interest rates, cost-of-living increases, and affordability challenges.

The disconnect between increasing supply and declining demand in the sales market highlights a significant societal shift, more Australians are turning to renting as a long-term solution. This is fueling demand for properties that offer both affordability and quality, with tenants willing to pay a premium for homes that provide stability.

This suggests to us that Australia is approaching a turning point, transitioning from a predominantly home-owning society to one where renting is becoming a lifetime tenure for many. This shift is redefining priorities in the rental market, where security and quality are no longer luxuries but necessities that tenants are prepared to invest in.