The latest release of the Rental Affordability Index finds the Australian rental crisis is getting worse, spreading from capital cities to regional areas.
The findings show little to no affordable options for vulnerable renters in Australia, including pensioners and single parents.
The Rental Affordability Index – published annually by SGS Economics and Planning, National Shelter, Brotherhood of St Laurence and Beyond Bank – shows that rental affordability has worsened in all major Australian cities and regions, except for Hobart and Canberra.
Increased housing demand in certain regional areas brought on by COVID-19 related population moves has seen rental prices spike to unaffordable heights across the country.
Regional Queensland is now the least affordable place of all regions and capital cities, with average rentals at $553 per week, costing 30 per cent of the average income, a figure that meets the threshold for rental stress.
A similar decline in affordability is seen across regional areas in all other states, except for Tasmania.
According to Ellen Witte, Principal and Partner at SGS Economics and Planning and lead author and analyst of the report:
Unaffordability has spread from the cities well into the regions. Households will have to live further away from where the jobs are to access affordable rents, and businesses are struggling to find workers.
The Rental Affordability Index finds that renters in every capital city are in a worse position than they were in 2019, before the start of the pandemic.
Greater Sydney has caught up to Greater Hobart as the least affordable rental housing market in the nation, posting its worst result since 2017. In Greater Sydney, the average renting household is now spending 29 per cent of their income on rent, with the average rental costing $650 a week. Ellen Witte, says:
This is a social challenge but also a deep economic problem. Key workers in critical industries are travelling further and further and being priced out of their city. We need a serious plan to provide the right housing at the right price to people who really need it. And we need to back that up, by supporting and empowering renters, not just homeowners.
Rental affordability becomes even more of a challenge for households on low to moderate incomes. The escalating rental costs have surpassed the increments in JobSeeker allowances. According to the Rental Affordability Index, a single person on the JobSeeker allowance must spend more than 75 per cent of their income to rent a one-bedroom apartment in any capital city.
Rental Affordability Index for a person on JobSeeker payments, capital cities, 2013-2023
The Australian rental market is unforgiving for the elderly too. Our estimates show that a one-bedroom dwelling in metropolitan and regional areas is severely unaffordable for single pensioners, requiring 50 per cent or more of their income to be spent on rent.
Ellen Witte, says:
This downward spiral has now reached the point where very few affordable long-term rentals are on offer. We need to address this problem from multiple angles. This means expanding social and affordable housing investment, rethinking how we use tax subsidies for housing and strengthening renters’ rights.
The Rental Affordability Index measures a typical household's annual income relative to their annual rent. If a household is spending more than 30 per cent of the income on rent, they are in ‘rental stress’. Rental stress means that a household can no longer afford other necessities – like education, energy or food – because their money goes to rent instead.
In 2019 -20, 42 per cent of all low-income households were in rental stress compared to 35 per cent in 2008. Given that the number of private renters is increasing, if significant steps are not taken, this decline in affordability will only worsen, leaving more and more people in vulnerable rental situations.
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