Nic Poole has his musical equipment set up in his parents cavernous, downstairs rumpus room. As he hits the snare drum, he twirls a drumstick in his other hand, before beating them both down. The type of skill and finesse that is only achieved by many hours rehearsing.
Although it is a handy set-up for the musician and part-time disability worker, the 27-year-old dreams of moving out. Nic has just released his first single, yet is finding the once common rite of passage, living with mates, elusive.
“It’s just so hard. Everything is so expensive,” he says, before taking his frustration out on his drum kit.
In the next city over, Newcastle, Nic inspects a rental property. He swats a mosquito before realising there are dozens on him.
“No, just no to this one,” he says.
Despite the inundation of insects, he decides to still check out the three-bedroom, two-bathroom house for rent.
We want to be near everything in Newcastle, but the rentals are old and expensive.
“Hmmmm…” is all he can muster when asked what he thinks about the 1950’s-style pink kitchen. The dozens of other people there look even less enthusiastic.
“So, let me get this straight. It is next to a swamp and is crap inside?”
In the hotly contested Newcastle rental market, this property is almost within Nic and his mates’ combined price range of $500 a week, at $530. It’s in an outer suburb of the city, near the University and Wetlands – which Nic is convinced is just a fancy name for a swamp.
“I don’t think it’s worth being attacked every day before you even get inside the house,” he laments.
Nic and his friends have been looking for a house to rent in Newcastle for eight months. They have applied for seven properties, all rejected. They cannot raise their budget, as Nic works part time and, like his two friends, receives a Disability Support Pension.
“We want to be near everything in Newcastle, but the rentals are old and expensive,” he says.
Newcastle and the regions saw a significant rent hike since the beginning of the pandemic.
Nationwide, rents keep climbing. They rose by 2.3 per cent in the last quarter, according to CoreLogic’s Quarterly Rental Review. This figure was lower than the previous quarter’s growth of 2.9 per cent and could be a key indicator that the high cost of living and low affordability has impacted the rental market. However, when looking at the annual growth to September, rent prices have risen nationally by 10 per cent.
Although CoreLogic’s report showed the first signs of the rental market slowing down, with the combined regions experiencing a growth of only 1.3 per cent, it is still another rise and vacancy rates are low. With both the national and capital city markets at 1.1 per cent, the regions sat at 1 per cent for the month of September. Even with flood events as one of the factors, low regional vacancy is a trend that has been sustained during the last 12 months. A year ago, the national market and capital cities were 2.1 and 2.4 per cent respectively; regional vacancy was 1.3 per cent.
Due to the high costs of inflation and rental prices, units have seen an upswing in popularity nationally, achieving an annual growth rate of 11.8 per cent – a new record. With the national median house price being $561, a unit offers better value at a median of $505 – a saving of $224 a month.
Core Logic believes unit demand will be present for many months, as people cannot afford houses, combined with migration now flowing steadily. It is still bad news for regional areas, as the price difference between houses and units is becoming smaller. A median unit price is $474, whereas a house is $501 – a saving of just $108 a month.
Apart from the rising costs, Nic and his friends have the extra challenge of finding accommodation with a separate shower, instead of shower-over-bath, due to their physical needs.
“Most of the bathrooms just aren’t suitable,” he said.
And they’re not alone. According to Anglicare’s Annual Rental Affordability Regional Report, a snapshot of Newcastle on March 19, 2022, revealed from the 1,510 rental properties advertised, not one was suitable or affordable for people on the Disability Support Pension. People receiving the Youth Allowance, also faced zero affordability, even within a share home.
For single people on the Age pension, four per cent, which equates to 57 homes, were affordable and a couple on the Age pension could only afford one per cent (12 homes). And it was not much better for people on a minimum wage, with single, full-time workers only being able to afford just over six per cent of Newcastle properties, or 99 homes.
Nathan Finney, senior investment specialist, from local real estate firm PRD Newcastle, is seeing Novocastrians struggle.
“Over 50 per cent of our applications don’t meet the affordability criteria,” he says, adding they test a tenant’s affordability by multiplying the rent by three.
“If the rental property is $500, the tenants must be making a combined $1500 net a week. And so many people just are not.”
A household would need to earn an average of $105,599 net to meet affordability criteria across their available properties.
“I had to tell a lady recently that the $400 house she was looking for since August [2020] just does not exist in Newcastle,” he says.
This is not surprising, given the median house price in Newcastle for advertised rentals, according to Domain, is $550. The median price for units is now $450. Just before the pandemic, in 2019, house medians were $450 and units, $380. Although, according to the Australian Bureau of Statistics, Newcastle’s median income of $52,758 from 2018-2019 is similar to the national median of $51,389 and NSW’s $51,818, the city’s rents have increased more.
CoreLogic’s research analyst, Kaytlin Ezzy said when looking at the Newcastle rent market during the pandemic, it was higher than most markets. “Since the onset of COVID, Newcastle rents have risen by 20.6 per cent, which is equivalent to a rental rise of approximately $103 a week.”
To put this in perspective, rents rose nationally by only 14 per cent during the same time, and 11.4 per cent across capital city markets. Over the last five years, Newcastle’s rent increased by 32 per cent.
Finney saw the prices spike during COVID.
“You had situations, like four people sharing a terrace house in Sydney and all needing their own space when they were working from home, and ultimately, really annoying each other,” he says. “When they realised they could get their own place, right near the beach … and cheaper, they jumped on it.”
With the influx to Newcastle, prices went up.
“It went gangbusters,” Finney adds. “Especially after the end of the last lockdown, as soon as people could get on the highway, they came up here. Every ‘open for inspection’ had people lining up around the corner.”
Real Estate Institute of NSW’s chief executive, Tim McKibbin, cannot see the pressure being taken off the regions.
Only 53 per cent of people seeking rental assistance with us are in the lower income bracket.
“It really is basic economics 101,” he says. “The demand for property is exceeding the supply of property substantially.”
McKibbin concedes the only solution is more properties.
“Because of the lockdowns in the cities, people decided it was better to live in a regional area … and the restrictions, as far as movement, was better … it pushed many locals out,” he says.
The CEO also believes there was a big oversight by property commentators, who believed at the start of COVID, prices would decrease by 30 per cent, due to the annual intake of 150,000 immigrants being stopped. “What they didn’t realise however, was that 500,000 expats came home,” he says.
“It’s such a crisis point, our rental market. Stress is unbelievable. There’s just nowhere for people to go,” Clare Van Doorn, NSW regional director at The Society of Saint Vincent De Paul, says, adding the market has risen too high to be sustainable for many renters.
“The big impact that we’ve had obviously is people working from home, people moving into our area …. people are being ejected from homes because they put up the rent. They can’t afford it. Even a $20 hike.”
She says the pressure of low affordability is impacting all aspects of renters’ lives. Of the people contacting them in Newcastle, an increase to 97 per cent are needing assistance to buy food.
“I honestly don’t know how people survive – if you’re getting $500 a week, how are you paying rent and then living as well?”
But it’s not just people on a lower income that are struggling.
“Only 53 per cent of people seeking rental assistance with us are in the lower income bracket,” she says.
“At least 80 per cent a week are new people to us – we are seeing families we have never seen before, single people, couples. Women over the age of 55 – they are the group that has risen in the last two years.”
About 3,000 people have sought rental assistance in the first quarter of this year. Traditionally affordable areas in the Hunter Valley, are no longer an option, Van Doorn says: “… because those able to work from home and looking for a lifestyle change have taken the stock. Unbelievable.”
She is also adamant the solution is more properties.
“We haven’t had any new builds – we need to have an increase in social and affordable housing – a mix – get a model that works to fit into communities,” she adds. “I’m sorry, surely in 2022 we can do that.”
And the need is urgent. The Australian Housing and Urban Research Institute has found the region will need 85,000 affordable and social housing dwellings by 2036 – up from 63,000 in 2016.
Back at his mum and dad’s lakeside house, Nic’s re-evaluating his options.
“We’re not looking for a few weeks. There’s nothing around,” he says.
“If we paid higher rent than $500 it would be like living in another lockdown – we wouldn’t be able to afford petrol or food and we’d be stuck at home again. There’s no point.”
This readjustment to expectations, harnessed during COVID, is defining the city.
“It would be good to have our own place, but we have to wait for the prices to come down,” he says.
Main image of Nic Poole by Lisa Edser.
