Projects
Rental Affordability Index: research report

High Impact project

Client:

SGS Self-Funded Research Project

Location:

Australia

Sector/s:

For Purpose, Housing

Service/s:

Annual research tracks rental affordability across Australia and highlights the experiences of disadvantaged households.

The annual rental affordability index (RAI) report is an easy-to-understand indicator of rental affordability relative to household incomes. Since its establishment in 2015, it has become a crucial tool for policymakers. It helps track rental affordability trends and informs evidence-based policy decisions – highlighting nuances between places and the experiences of disadvantaged households. To produce the Index each year, we work closely with our partners: National Shelter, Beyond Bank, and Brotherhood St Laurence.

Background

Studies of housing affordability in Australia have focused primarily on purchase affordability (e.g. housing affordability index) and measuring housing stress at different points in time for different household types. However, a gap existed in tracking rental affordability over time across Australia.

The RAI fills this gap, providing insights into how rental affordability impacts different places and household types. Its basis is customised data and analysis revealing affordability trends in the rental market, with a particular focus on low-income households. Rental affordability concerns a growing and already large proportion of Australians as households increasingly face constraints in purchasing their first house. Renting households on average have lower-incomes, and therefore affordability issues affect renting households more than homeowners.

Read the 2023 Rental Affordability Index

Click here to download the report

Explore the interactive map and dashboard to discover rental affordability trends and stories across the nation.

The RAI method

It is generally accepted that if housing costs exceed 30 per cent of a low income household’s (households with the lowest 40 per cent of income) gross income, then that household is experiencing housing stress (30/40 rule). In the RAI, households who are paying 30 per cent of income on rent have a score of 100, indicating that these households are at the critical threshold for housing stress. A score of 100 or less indicates that households would pay more than 30 per cent of income to access a rental dwelling, meaning they are at risk of experiencing housing stress.

To better illustrate the situation for vulnerable groups, we assess the rental affordability situation for eleven Australian household types. These are:

Single person on JobSeeker payment
Single pensioner
Pensioner couple
Single part-time worker parent on benefits
Single full-time working parent
Single income couple with children
Dual income couple with children
Student sharehouse
Minimum wage couple
Hospitality worker

_{The RAI is calculated using the following equation, where ‘qualifying income’ refers to the household income required to pay rent where rent is equal to 30% of income. RAI = (Median income ⁄ Qualifying Income) x 100}