Insights

Recent research into rental affordability in Australia shows no relief for low-income households

Posted November 27, 2019

Author(s):

Ellen Witte, Kishan Ratnam, Joseph Giang

Sectors:

Housing

Types:

Local government
State government
Federal Government

Hobart remains the least affordable city to rent in Australia while Newstart recipients and other low-income households are experiencing severe rental stress, the latest release of the Rental Affordability Index has found.

The award-winning Rental Affordability Index (RAI) is an indicator of the price of rents relative to household incomes based on new rental agreements and is released by SGS Economics and Planning, National Shelter, Community Sector Banking, and the Brotherhood of St Laurence annually.

This release has found that rental affordability in some Australia's cities, including Sydney, has improved marginally. However, the situation is untenable for people on Newstart, with rent costing at least 77 per cent of their income in every capital city. The situation is only marginally better for single and dual pensioners who face unaffordable rents across Australia.

People on Newstart are the most vulnerable cohort in the country as they experience the worst levels of housing stress. After paying the rent there are not enough resources left, and people may not even be able to fork out money to go to a job interview. There is an urgent need to raise the Newstart allowance and provide these households with a pathway out of the poverty trap.
— Ellen Witte, lead RAI author and SGS Principal & Partner

RAI key findings

No relief for low-income households

Rental stress has become so entrenched and severe for low-income households that the recent improvement in some cities has brought little relief - with this situation for most low-income households in these metropolitan areas remaining untenable.

More than a million households need some form of housing assistance, while 43 per cent of low-income households experience rental stress.

Many working families and all non-working groups on benefits face severe rental affordability issues. Renting households on incomes below $60,000 per annum have no affordable rentals in our cities, including all capitals and nearly every centre on the east coast. In the Western Australia mining regions, even those earning up to $85,000 face unaffordable rents.

A vision needed for Hobart

A score of 100 and below on the RAI shows that households would be required to spend at least 30 per cent of their income on rent. While a score of 100-120 indicates households are facing moderately unaffordable rents.

Greater Hobart is the only capital city in Australia where rental affordability has dropped below the critical threshold of 100, reaching a RAI score of 93 in June 2019. This means that in metropolitan Hobart, average income households are now paying 30 per cent of their income or more on rent. Greater Adelaide has a score of 113, which has surpassed Sydney as the second least affordable capital city, with a score of 119. Both are considered moderately unaffordable.

Hobart is in the midst of a rental crisis, the worst in the country. The rents have been increasing by 10 per cent per annum over the last three years. No matter how hard you work, you won’t be able to keep up with price rises like this. The market is failing and there is an urgent need for the government to intervene.
— Ellen Witte, lead RAI author and SGS Principal & Partner