This article first appeared on News.au.
The Australian Real Estate Association says people in Sydney, Melbourne and Brisbane are getting trapped by a housing crisis that will leave them with nowhere to live.
It’s been a particularly bad year for people in the city, with rental prices in the region having jumped by up to 70 per cent since the start of the year.
The ARA says that as rents continue to rise, it’s important for people to be aware of the risks.
“The rental market is very unstable and people are going through a period of rent inflation, and they need to be mindful of the financial impact that could be,” ARA regional director Richard McAlpine said.
He said people need to understand how the rental market works.
Mr McAlpin says a number of factors have contributed to the increase in rents.
Rents have increased in recent years, with a median monthly rent in Sydney up by over 80 per cent from $2,500 to $3,300 last year.
But in Brisbane and Melbourne, the rent has been up by about 70 per per cent.
Some apartments in Brisbane are available for just $1,300 a month, while those in Melbourne are available at $3:200 a month.
In Sydney, a median rent for a one-bedroom apartment is now $2.15 million.
On the flip side, the median rent in Melbourne is now just $3.70 million, according to the Australian Real Property Institute (ARPI).
The ARPI says rents in Sydney and Melbourne have grown by an average of 60 per cent each year since 2000.
While rents in both cities have increased, there is a correlation between rents and affordability, according the ARA.
There’s also a correlation with the size of the unit, according ARPI.
When looking at a one bedroom, the ARPI’s national average is $1.65 million, but in Sydney it’s $2 million.
But there’s also evidence that in some suburbs, the average price of a one bedflat is lower than in others.
Property prices are a key driver of how people can afford to live in the suburbs, according Mr McAlpan.
For example, in a suburb called Oakleigh, a one room is now available for $1 million, while in the outer suburbs, it is $3 million.
The average price for a two bedroom in Oakleigh is now about $2million.
A person living in Sydney may have a $2m budget, but their home is more expensive in Melbourne, he said.
“In Sydney the average house price is $2-3 million, whereas the average for the outer Melbourne suburbs is $4.5-5 million.
So in the inner city, the house price will be higher than in the suburban areas.”
Mr McMalpine said the problem is the rental supply is low, with more people living in apartment buildings than ever before.
But he said there is some hope for those who live in expensive apartments, like the people who are buying homes for the first time.
“I think there’s going to be a lot of people who just want to be in a home, and who want to stay in their own house,” he said.
“They’re the ones who are coming up in the middle of the market.
If you’re in a $7 million apartment, it doesn’t really matter if it’s in a luxury house or a one per cent home, it’ll still cost you $7.5 million to $10 million.”
“It’s not just about money, it really is about lifestyle, it can really be a luxury lifestyle.”
He also said it’s good to remember that renting is not an investment, but an investment in the future.
If you want to learn more about renting, Mr McAalpin recommends checking out the ARRIA’s Rent Trends Report.
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