Why Is Rent So Expensive in Australia?

by Greg on October 19, 2015

Cost of living

Along with nations like Belgium and Canada, Australia is easily one of the most expensive countries in the world in regard to renting and buying property. If you are currently renting – or have even just casually browsed rental property websites – you are most likely already aware of what some are calling our ‘rental crisis’. Below is a brief look at some of the factors that have led to this situation and some ideas for how you can minimise the damage renting does to your budget.

 Everything Is Expensive in Australia

From gadgets to groceries, just about anything you purchase here is expensive in comparison to the prices in other countries, including the US and even our neighbours in New Zealand. There are some products that are charged at a particularly high premium in Australia, including content downloaded via the internet, cosmetics, petrol, and – most relevantly – housing.

Wage Stagnation

While Australian housing and rent costs have climbed steadily over the decades, the average wage has barely changed since the 1980s. The income-to-house-price ratio in 1967 was hugely different to that of today. For example, in Melbourne, your house would have cost about three times as much as your annual income in the late ’60s. Nowadays, it could take about 10 or 11 of your annual salaries to equal the price of your home. This substantial gap plays a large part in driving rent prices up.

Urbanised Population

A possible contributor to the increase of housing and rent prices is the fact that close to 66% of Australians live in cities with populations of over a million people, a statistic only beaten by the figures of Singapore and Hong Kong. Prime city locations combined with relatively large properties play a role in keeping average rent rates high.

So What Can You Do About It?

There is not a lot you can personally do to make an impact on the political and economic landscape that has led to the high price of rent. However, there are some choices you can make to reduce the extent to which this affects you.

Buy Sooner

The sooner you can transition from renting to owning, the sooner you will be able to convert your home into an asset. While mortgage repayments may not seem any less burdensome than rent, at least the money is going towards procuring your own property – rather than helping someone else secure theirs. You might be able to take this step sooner than you think too. Heritage Bank has a handy home loan calculator that might help you visualize how much you’re able to afford. Check it out here.


Choosing a share house over renting your own place alone can make a substantial difference to the amount of rent you pay each fortnight. This is not a solution for everyone, but if you mix well with others and have plenty of patience, this might be the best way for you to avoid unmanageable rent costs.

Save Elsewhere

If the best rental arrangement you can find is still disproportionate to your income, you are left with the basic strategy of saving money in other aspects of your life. While not ideal, cutting back on daily luxuries or vices can help you get by until your circumstances change.

While Australia is still the ‘lucky country’, there is no escaping the fact that our average rent prices leave a lot to be desired. What are your thoughts on this topic? Any predictions for what the housing market will hold for Aussie renters in the future? Discuss in the comments below.

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