Why more Australians on high incomes are renting
This may be contributing to continually rising weekly rents
2 min
There has been a substantial increase in the number of Australians earning high incomes who are renting their homes instead of owning them, and this may be another element contributing to higher market demand and continually rising rents, according to new research.
The portion of households with an annual income of $140,000 per year (in 2021 dollars), went from 8 percent of the private rental market in 1996 to 24 percent in 2021, according to research by the Australian Housing and Urban Research Institute (AHURI). The AHURI study highlights that longer-term declines in the rate of home ownership in Australia are likely the cause of this trend.
The biggest challenge this creates is the flow-on effect on lower-income households because they may face stronger competition for a limited supply of rental stock, and they also have less capacity to cope with rising rents that look likely to keep going up due to the entrenched undersupply.
The 2024 ANZ CoreLogic Housing Affordability Report notes that weekly rents have been rising strongly since the pandemic and are currently re-accelerating. “Nationally, annual rent growth has lifted from a recent low of 8.1 percent year-on-year in October 2023, to 8.6 percent year-on-year in March 2024,” according to the report. “The re-acceleration was particularly evident in house rents, where annual growth bottomed out at 6.8 percent in the year to September, and rose to 8.4 percent in the year to March 2024.”
Rents are also rising in markets that have experienced recent declines. “In Hobart, rent values saw a downturn of -6 percent between March and October 2023. Since bottoming out in October, rents have now moved 5 percent higher to the end of March, and are just 1 percent off the record highs in March 2023. The Canberra rental market was the only other capital city to see a decline in rents in recent years, where rent values fell -3.8 percent between June 2022 and September 2023. Since then, Canberra rents have risen 3.5 percent, and are 1 percent from the record high.”
The Productivity Commission’s review of the National Housing and Homelessness Agreement points out that high-income earners also have more capacity to relocate to cheaper markets when rents rise, which creates more competition for lower-income households competing for homes in those same areas.
ANZ CoreLogic notes that rents in lower-cost markets have risen the most in recent years, so much so that the portion of earnings that lower-income households have to dedicate to rent has reached a record high 54.3 percent. For middle-income households, it’s 32.2 percent and for high-income households, it’s just 22.9 percent. ‘Housing stress’ has long been defined as requiring more than 30 percent of income to put a roof over your head.
While some high-income households may aspire to own their own homes, rising property values have made that a difficult and long process given the years it takes to save a deposit. ANZ CoreLogic data shows it now takes a median 10.1 years in the capital cities and 9.9 years in regional areas to save a 20 percent deposit to buy a property.
It also takes 48.3 percent of income in the cities and 47.1 percent in the regions to cover mortgage repayments at today’s home loan interest rates, which is far greater than the portion of income required to service rents at a median 30.4 percent in cities and 33.3 percent in the regions.
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2 min
Former Google CEO Eric Schmidt is selling his Northern California estate, which was listed Monday for $24.5 million.
Located in Atherton, an extremely affluent town northwest of Palo Alto and about 30 miles south of San Francisco, the 3.36-acre property is made up of three parcels that Schmidt acquired over the years, according to public records and Compass, who has the listing.
Schmidt, 69, and his wife, businesswoman Wendy Schmidt, purchased the main home in 1990 for $2 million, according to public records accessed via PropertyShark. They remodelled the 1969 home in 2007, and at that time, bought a neighbouring parcel of land, allowing an expansion of the main house and the addition of a guest house, according to Compass, who holds the listing. A third parcel was later acquired, on which the Schmidts added an English garden house and landscaped grounds overlooking the Eastern Hills.
“Finding three contiguous parcels in Atherton is rare. Even rarer are those with views of the Eastern hills,” said listing agent Katharine Carroll of the reSolve Group at Compass. “The location of this residence is ultra private, at the back of a cul-de-sac with the main house built into a hillside that provides privacy and very good security.”
Across the estate, there are five bedrooms, five full bathrooms and six half bathrooms.
The 5,265-square-foot main house also offers a number of private outdoor spaces on its upper level, including a large terrace off the primary suite, another large terrace off a secondary bedroom, plus a third smaller terrace and two balconies.
Behind the main house is a patio with a pool and spa. For even more outdoor space, there’s an entertaining pavilion, an open lawn and an outdoor fireplace area near the guest quarters.
The grounds themselves are also a standout feature, with an array of mature plants and specimen trees. The upper portion of the property’s landscaping is designed around an Amdega-designed conservatory, which was imported from the U.K. Around the greenhouse, there is a garden of raised beds and fruit trees, Carroll said.
“From the moment you step onto the grounds, it feels as if you’ve been transported to a private botanical sanctuary,” she said.
Schmidt served as Google’s CEO from 2001 to 2011, and then became the company’s executive chairman until 2015. He could not be reached for comment.
This article first appeared on Mansion Global
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