Interest rates are up 2.35% and renters are tougher than ever. Yes, tenants, not owners.
I understand landlords objecting to this, but tenants are paying even more money for housing and won’t have any equity to show for it.
No amount of skimping and saving to make lease payments will result in greater financial security. In fact, if you’re a tenant, your financial future looks bleaker than ever.
Proptrack Rental Report found that in the three months to June 2022, median weekly advertised rents rose 2.2% and were 7% higher year-over-year, the highest growth recorded in seven last years.
It’s too early to tell what interest rate increases will mean for rental prices, but I can’t imagine it will bring them down. So realistically they are probably already getting worse.
I felt the change myself. I went from renting a one-bedroom house in Sydney’s CBD and paying $590, to a two-bedroom unit in a less central suburb for $750. The one bedroom apartment I left is now rented for $615.
Obviously I opted for somewhere with a bit more room, but the $160 difference is a huge jump.
Especially considering that I still live in a relatively small place, and have moved to a less desirable suburb. If I wanted a two-bedroom in the suburbs where I was, I was looking at the $800 mark.
Now that’s not a don’t cry for me argentina story. Ultimately, I can live in one of the most expensive cities in the world, and I can afford to live downtown.
I can afford to pay that rent too, but I can’t afford to pay that rent and save for a mortgage. This ultimately puts me in an endless cycle of renting, leaving me at the mercy of the landlord.
Moreover, if landlords’ purse strings tighten, tenants will experience a ripple effect that will affect their standard of living.
I don’t think it’s news to me to point out that landlords have a reputation for being stingy with their tenants, from not fixing things to adamant refusal to provide livable living conditions. Certainly, if they are more strapped for money than ever, it will make this problem worse.
To drive the point home, I did a quick poll on my Instagram asking my friends (and strangers who like my selfies) what’s the most insignificant thing a landlord wouldn’t solve? Responses poured in.
Highlights include: ‘A burst pipe flooded ground floor apartments. The owner told us that we were dramatic about the water damage!
A landlord refused to fix a “literal hole in my bedroom wall!”
A landlord refused to attach a light to the front door because “they’d knock it down in two years anyway!”
Another even took two years to fix a lingering mold problem, and there was even one homeowner who suggested a DIY approach for a towel rack: “They told us to glue it back on!”
All of this was happening when interest rates were at an all-time high. What’s happening now that landlords can throw in your face that they’re more cash-strapped than they’ve been in two decades?
None of this bodes well for tenants. In fact, it’s downright scary. I understand that the interest rate conversation is important.
This impacts many Australians, but if you think interest rates only hurt people with mortgages, you are looking at the issue from a highly privileged perspective.
At the end of the day, the people who will suffer, as always, are the most vulnerable, and the most vulnerable people are not those with mortgages.
They are the ones who cannot pay their own mortgages. They are forced to pay someone else and pay a raise with no long term benefits.
Renters are watching their own home-buying dreams vanish at the same heartbreaking pace as interest rates rise.
Mary Madigan is a freelance writer.