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Australia’s rental crisis reaches new heights: 2024 Rental Affordability Index

Posted November 21, 2024

SGS Economics and Planning RAICOVERARTICLE

The 2024 Rental Affordability Index reveals Australia's rental crisis is only getting worse, driving more households into financial hardship.

Marking its tenth annual release, the Rental Affordability Index, released by SGS Economics and Planning and National Shelter, shows rental affordability has hit record lows in nearly every major capital city and region, with low-income renters bearing the brunt of soaring rents. For the first time, Perth has overtaken Sydney as the least affordable city to rent.

With affordability plummeting nationwide, individuals and families are being pushed further into a cost-of-living crisis. In all major cities and regional areas, rental markets are now classified as “critically unaffordable” for those relying on JobSeeker, part-time parenting payments, or pensions. Affordable housing options have become nearly impossible to find for single hospitality workers, with regional South Australia remaining the only affordable area.

Over the past year, major capital cities—Sydney, Melbourne, Brisbane, Perth, and Adelaide—have recorded their worst affordability scores since the Index’s inception. Perth saw the steepest decline in affordability, dropping by a staggering 13 per cent, followed by Adelaide at 8 per cent, Melbourne at 6 per cent, Sydney at 5 per cent, and Brisbane at 4 per cent.

This trend highlights how rapidly affordability has worsened across major cities, with Perth experiencing the most significant shift. Now the least affordable city, Perth’s median rents have reached $629, consuming 31 per cent of median incomes—a sharp increase from just four years ago, when rent accounted for only 20 per cent of income. Sydney follows closely, with a median rent of $720, taking up 30 per cent of median incomes.

Ellen Witte, Principal and Partner at SGS Economics and Planning and lead author of the report, explained:

Deteriorating affordability across the country has been driven by a number of factors, including increasing material costs, the increased cost of construction, rising interest rates, a return to pre-pandemic rates of population growth, and strong rent price increases.

Rental Affordability scores* for Greater Sydney and Greater Perth
Source: SGS Economics and Planning, 2024

Not all states experienced a decline in rental affordability. Tasmania and the ACT saw slight improvements, with the ACT notably benefiting from rent increase limits introduced in 2019. These regulatory measures appear to have managed rent hikes and eased financial strain on renters. Ellen Witte explains:

Not only are rent rises hurting households, they are also exacerbating inflation. The ACT introduced rent increase limits in 2019, and rental affordability has improved there since. This suggests that guide rails that prevent excessive rent increases could serve a dual purpose of improving rental affordability and lowering inflation.

SGS Economics and Planning Ellen RAI2024
Ellen Witte, Principal and Partner at SGS Economics and Planning and lead author of the report
Rental affordability for capital cities 2018-2024
Source: SGS Economics and Planning, 2024

This edition is the first time the “critically unaffordable” category has been introduced.

“Huge swathes of Australia are now unaffordable to even median income renters. With rental affordability deteriorating this rapidly, rents are now ‘critically unaffordable’ for pensioners, JobSeekers and some single parents.” Said Ellen Witte. “We added the ‘critically unaffordable’ category to highlight there are now households that would have to pay 75 per cent or more of their income or more on rent.”

Rental affordability for Single Person on Benefits in Sydney (left) and Melbourne (right), Q2 2024
SGS Economics and Planning Syd Melb RAI
Source: SGS Economics and Planning, 2024

This year’s Rental Affordability Index reveals a growing crisis in outer suburban and regional areas, where unaffordable rents compound existing challenges such as limited transportation, education, and healthcare access. Since its inception, the Index has tracked a troubling trend: previously affordable areas like South West Sydney and South East Melbourne are increasingly out of reach for average renters.

Affordability has sharply worsened across urban and regional Australia since 2021, forcing many households to make impossible choices between basic needs and housing. John Engeler, spokesperson for National Shelter, stresses the urgency of action:

Governments must urgently act to reverse this affordability crisis, including by building more social and affordable homes and better regulating rental markets.

The Rental Affordability Index was developed with support from Beyond Bank Australia Foundation. As the crisis deepens, it calls for an urgent need for policy measures to address rental affordability and protect vulnerable renters nationwide.

*The Rental Affordability Index scores range from 1 to 200. The higher the score, the more affordable the rental housing is in an area. The lower the score, the less affordable.

For the full story, along with more detailed facts and figures, read the report.

To explore rental affordability trends and stories across the nation, click below to access the interactive map and dashboard.


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SGS Economics Planning Ellen Witte
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Ellen Witte

Principal & Partner

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SGS Economics Planning Kishan Ratnam
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Kishan Ratnam

Senior Associate & Partner

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