Australian Renters Have Experienced a Sharp Decline in Living Standards Over Recent Years
Australian renters are facing an unprecedented squeeze on their living standards, driven by soaring rental costs and a stagnant economy. According to Domain, national median house rents surged by $180 per week, or 38%, from $470 to $650 between September 2021 and September 2024. Over the same period, national median unit rents skyrocketed by $210 per week, or 50%, from $420 to $630. These drastic increases have slashed tenants’ disposable incomes, curbing household consumption and tightening economic conditions further.
The Commonwealth Bank of Australia’s November Household Spending Insights (HSI) survey revealed that tenant households have experienced the steepest decline in spending over the past year. This is a direct consequence of ballooning rental costs, which now consume a significant share of household incomes, leaving little room for discretionary spending.
Labor’s Economic Mismanagement Amplifies the Crisis
Labor’s inability to manage the economy has left Australian renters vulnerable to these financial pressures. Policymakers have pushed for high-density living solutions, advocating for apartment towers as a way to improve housing affordability. However, this approach has backfired. Data from the Australian Bureau of Statistics (ABS) reveals that building small apartments is more expensive on a per-square-metre basis than constructing detached houses.
Michael Matusik, a prominent housing analyst, highlights the problem:
“Whilst all building costs have risen over the past five years, new apartment builds—regardless of type—have seen a rapid escalation in construction costs. There are many reasons why, including union-related thuggery, a shortage of skilled labour, and limited interest from tier one and two builders. Moreover, many new apartment projects sell off-plan but don’t actually get built.”
The prohibitive cost of constructing apartments has led to a collapse in construction rates, with annual approvals plummeting by 52% from their peak. Labor’s failure to address these systemic issues has only exacerbated the housing supply crisis, further fuelling rent hikes.
Population Growth Outpaces Housing Supply
Meanwhile, Australia’s population continues to swell. The ABS’s Q3 2024 national accounts show that the population grew by nearly 640,000 people over the year, driven by record levels of net arrivals. This surge in demand for housing, combined with stagnating construction, has created a perfect storm for renters.
A Deteriorating Economic Landscape
The broader economic picture is equally grim. The ABS’s Q3 national accounts indicate that annual real GDP growth collapsed to a mere 0.8%, the lowest rate since December 1991 outside of the pandemic. Real per capita GDP has now declined for seven consecutive quarters, marking the most prolonged decline on record.
Despite record public demand, which reached an unprecedented 27.5% of GDP in Q3, economic growth remains anaemic. Labor’s policies have failed to stimulate productivity or address structural inefficiencies, leaving Australians to bear the brunt of declining living standards.
A Call for Change
The sharp decline in renters’ living standards underscores the urgent need for economic reform. Labor’s focus on high-density housing has proven ineffective and costly, while population growth outpaces housing supply. Policymakers must prioritise reducing construction costs, incentivising housing development, and addressing broader economic stagnation to restore living standards for Australian renters.
