Rental unaffordability is threatening more Aussies with homelessness

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While Sydney continues to be Australia’s least affordable city for rental accommodations, among all the cities, Melbourne has seen the greatest decline in affordability since 2013, notes the latest Rental Affordability Index (RAI), which was released today.

“The latest Rental Affordability Index shows housing stress is a common reality for people in the rental market, especially those on low incomes, who have little left to spend on essentials like food, electricity, fuel and education, after paying rent,” said Andrew Cairns, chief executive officer of Community Sector Banking. “People in the lowest income households are being pushed out of the rental market, and into poverty and homelessness - this situation is most dire in Sydney.”

Produced by National Shelter, Community Sector Banking, and SGS Economics & Planning, the RAI is an easy-to-understand indicator of rental affordability relative to household incomes across the country. Released bi-annually, the Rental Affordability Index is intended to complement the Housing Affordability Index (HAI), which is a price index for the purchase of homes.

“We are most concerned that there is no national strategy to tackle housing affordability, especially when we see that additional supply is not reaching low income households, and increases in homelessness are being reported,” observed Adrian Pisarski, executive officer of National Shelter.

With homeownership falling further out of reach for many households, rental unaffordability is a key issue that needs to be addressed. The RAI makes it clear that rental affordability is dividing the country, with service rich areas tending to be very unaffordable, while service poor areas tended to be more affordable.

No end in sight for Sydney’s rental affordability crisis 

Greater Sydney continues to be at crisis level in terms of rental affordability, with a RAI of 108 in the June quarter of 2016. The average renting household allocates nearly 28% of its total income to pay the median rent of $480 per week.

Most of Sydney’s inner-city areas remain extremely unaffordable, and regional New South Wales remains the least affordable regional area, despite experiencing a slight improvement in affordability over the past quarters.

Melbourne most unaffordable city for low income households

Despite seeing the most significant fall in affordability since 2013, Greater Melbourne is now the country’s second most affordable metropolitan area, with a RAI of 126 in the June quarter of 2016.

The average renting household spends around 24% of total income on rent. However, affordability varies greatly across different income groups and areas. The situation is most dire for non-family, mostly single person households. Such households allocate nearly 110% of total income on rent, even after discounting average rents for this group by 25% for access to social housing.

Brisbane and Adelaide reasonable but volatile

While Brisbane and Adelaide scored reasonably well overall in the latest index, some volatility was noted. Median rents fluctuated most significantly in Brisbane, from a high of $409 in March to a low of $397 in June 2016.

The average renting household in Greater Brisbane allocates around 25% of total income on rent, while those in Greater Adelaide allocate nearly 27% of total income on rent.


Related stories:
Budget 2016: What Tougher Super Laws Mean For The Property Market
Calls For 'Drastic' Change As Rental Affordability Deteriorates

 

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Comments
  • Kim Butler says on 26/11/2016 06:50:02 AM

    I pay $500 per week. I live in Merrylands.
    The unit I live in is not even worth the value of money I pay. The unit sits above busy Woodville Road has many cracks in the walls from the Buliding movement from the on going traffic.. Not to mention the noise and the Car and Truck pollution my family inhales everyday.
    There's no Airflow or extractors in the dark dingy bathrooms so the mould grows out of control. We have no roof covering the out door balcony, so when there's high winds dangerously pieces of my out door furniture have been picked up by the wind and hurled onto the busy highway . I'm grateful no one has been Killed. Our bottom basement floods regularly and there are seriously bad Mosquitos .
    We are a two income couple that have to live week to week, it's very hard to put money away just to save for a bond to move out to somewhere more pleasant and healthier.
    I think that a lot of landlords and Realitys are letting their long term good honest on time rent paying tenants down.
    Stricter laws should apply to these people regarding letting ou the properties. It should be mandontry to paint all units with mould/antibacterial paint inside. All balconies should be Enviromently and child friendly. Must supply Spilt air conditioning and air purifying . Every block if units containing 40 or more flats should have a pool/Gym and a garden with a play area for Children.

  • Rosie says on 02/12/2016 01:56:26 PM

    $500 per week is a lot for what you're describing! I believe the Housing Authority has a bond assistance scheme that might be of help to you? Eligibility criteria are here http://www.housing.wa.gov.au/housingoptions/rentaloptions/bondassistance/eligibility/Pages/default.aspx

  • Rosie says on 02/12/2016 03:45:36 PM

    Sorry, just realised this is WA only. But there should be something similar in VIC :)

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