I think we can both agree that whether or not someone can afford something is dependent on whether or not they have the money to pay for it.
OK, lets take the most vulnerable of people into this equation. Welfare recipients! And let's take a look at the rents they pay. No matter where you live in Australia, with the exception of some remote areas, welfare rates are the same. I won't make assumptions as to what they pay, so I will give two examples, based on what I know to be true.
In and around Elizabeth, SA, rents for a 3 bedroom dwelling are around $200-$250pw.
In and around Mt Druitt, NSW, rents for a similar property are around $300-$340pw.
If you were to talk to someone in Elizabeth and tell them their rent was going to go up to the level of the Mt Druitt rents, they would tell you they can't afford it. Yet, when you look at the number of people in Mt Druitt paying those rents, it is clear that they can.
If you have a home to rent & you are asking, say, $500pw for rent, and you do an open home and you get 20 parties through, and half of them fill in an application, and a couple of them have been looking for a while & can't get anywhere to rent, and they turn around and offer an extra $20pw. Presuming that they are of the quality you are looking for in a tenant, the Landlord would take the ones offering the most money.
This is again, supply and demand. When you've got a small amount of rental places available, and a heap of people wanting to rent them, costs go up. It does work the other way as well, in that if there's a glut of rentals on the market, and not a lot of tenants, the price goes down, or you get Landlords doing things like offering a week or two free, etc.
A personal example from when I was young, & renting.
My first unit cost me $40pw. It was a cosy 2bedroom unit, and the rent stayed at this price for a while. Then, out of nowhere, the rent rises came. I remember at the time, they went from $40 to $80pw in the space of a couple of years, and it was very hard on me, for a time, but slowly the increases at work and a few adjustments, and it was all good again.
The thing is....I couldn't have moved elsewhere, as all the rents in the area did the same thing. I was forced to suck it up, just like everyone else. I could have got a flatmate, as it was a two bedder, but chose to keep my spare room. This was around 1986.
That same unit would rent now, for around $340pw.
I say this without having had as much experience as you have had in the property game.
That's fine. We are all here to learn.
Rents have always increased over time with periods of stagnation and some falls in between. Yields are already much higher than 5% in many suburbs of many cities.
Exactly right!