The Rental Affordability Index (RAI) 2021 exposes the increasing unaffordability of rental properties across Australia for lower-income households and shows that many renters are worse off than before the COVID-19 pandemic.
There is currently no affordable rental housing in Australia for single pensioners, pensioner couples, people on JobSeeker, and single part-time working parents also on benefits, apart from in regional South Australia.
Rental prices continue to soar across the regions, pushing locals into rental stress and making it less accessible for city renters seeking a tree or sea change.
Perth saw the largest decrease in affordability across all capital cities over the last twelve months while Hobart continues to be the least affordable city to rent in Australia.
Ellen Witte, SGS partner and report lead author, said the COVID-19 pandemic significantly impacted rental affordability across Australia.
This report shows the most marked changes in rental affordability since we first released the RAI in 2015 – especially for JobSeeker recipients and renters in many regional areas where affordability has plummeted.
The situation continues to be untenable for low-income households. With households having to pay most of their income on rent, many are pushed into poor quality, overcrowded houses and often far away from jobs and services.
People on JobSeeker experienced a short reprieve from soaring rents. But now, in Perth, Hobart and Brisbane, they are even worse off than before.
We really need to start thinking what our priorities are – finding people a roof to keep over their heads or looking at housing as an investment market.
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Rental affordability plummeted in regional Australia
During the pandemic, many households moved out of the capital cities into regional areas, where rental affordability has significantly deteriorated. Normal net migration to regional Australia is between 4,000 and 6,000 people per quarter; from June 2020 to March 2021, net migration peaked at 12,000 people per quarter.
Regional areas such as Wollongong and the Gold and Sunshine Coasts are now unaffordable for households earning under $80,000 per annum.
During the pandemic, many households relocated from capital cities into regional areas – which had a major impact on housing demand and consequently rental affordability plummeted. Households from capital cities also tend to have higher incomes, pricing the local community out of the market.
Rental affordability is worse than before the pandemic for many JobSeekers
JobSeeker in major cities temporarily saw rental affordability increase due to larger allowances, but these households are now back at the same stress levels as they were pre-pandemic, except Greater Melbourne.
In Greater Perth, Hobart and Brisbane, rental affordability is worse than before the pandemic.
In Canberra and Sydney, a single person on JobSeeker now pays 113 per cent and 110 per cent of their income on rent.
Hobart remains the least affordable city to rent
The RAI found Hobart remains the least affordable city to rent in Australia, with the average household income ($67,900 gross per annum) paying 34 per cent of their income under a new rental agreement.
The onset of the COVID-19 pandemic saw improved affordability in several parts of the city including central South Hobart, Taroona, and Lindisfarne – which notably tend to be in demand by international students and tourists.
The reprieve in affordability levels was short-lived. Rental affordability is now even lower than pre-pandemic. Overall rental affordability plummeted by 9 per cent compared to last year.
The average income rental household is now paying 34 per cent of income on rent to enter a rental agreement. This means even full-time working households are now in housing stress and struggling to pay for other primary needs such as food, medicine and education for their children.
Perth showed the greatest drop in rental affordability
Perth is now less affordable than Sydney and Melbourne (having previously been the most affordable capital). This is the largest decrease in affordability across all capital cities over the last twelve months.
While Perth remains more affordable for average income households, the average masks an absence of affordable rentals for single people on benefits, pensioners, single parents working part-time and on benefits and any household earning under $60,000 per annum.
Unaffordable rent continues to affect Western Australia, with lower-income households impacted the most. Low-income households from Kununurra in the north to Cape Naturaliste and Albany in the south and mining regions in the Pilbara and Goldfields regions have no affordable rental housing. So too, the whole of Perth, Mandurah and other areas.
Rental affordability improved in Greater Melbourne
Greater Melbourne saw an improvement in rental affordability. Rental affordability improved in Melbourne’s inner-urban areas while rents on the outer edges increased. It improved 7.3 per cent, and the average rental household now pays 20 per cent of their income on rent. JobSeekers still face severely unaffordable rents, paying 79 per cent of their income on rent.