Housing stress is on the rise in regional Australia as well as every capital city, as tenants grapple with “unsustainable” rent increases outpacing wages.
The latest annual Rental Affordability Index, released on Tuesday, shows more than 40% of low-income households are now in rental stress and struggling to find money to pay for food, heating and healthcare.
The RAI is a key annual indicator of rental affordability relative to household income. If a tenant spends more than 30% of their income on rent, they are considered to be in housing stress.
Regional areas have been the hardest hit by decreasing rental affordability, the report found, with Hobart continuing to be the least affordable city due to inadequate supply pushing prices above wages.
But each capital city has taken a blow.
Rental affordability across Sydney has steadily fallen in the past year after moderate improvement during Covid lockdowns, and remained “critically unaffordable” to a significant proportion of renters.
The least affordable suburbs were Bondi, Darling Point and Vaucluse.
Brisbane, for the first time, was considered “moderately unaffordable” and Perth was at its lowest rental affordability rate since 2016.
Melbourne, while experiencing a decline to pre-pandemic levels of affordability, was the most affordable capital city in Australia with average rental households having a gross income of $101,300.
The chief executive of National Shelter, Emma Greenhalgh, said those bearing the brunt of the rental crisis were people on low incomes and income support payments.
Rental affordability remained poor for single people on jobseeker even during the Covid-19 supplement, the report found, with rising rents in capital cities continually outpacing the allowance and pushing recipients to the outer fringes of cities.
Data shows 42% of low-income households are now in rental stress, compared with 35% in 2008. It comes as the jobseeker payment has fallen from $32,638 in 2020 to $21,320.
For single pensioners, living in metropolitan areas would require 50% or more of income to be spent on rent in the majority of capital cities.
“Households are having to make very, very tough decisions, to find accommodation elsewhere or bear the rent increase and cut back on expenses even further than what they are,” Greenhalgh said.
“What we’re seeing is adult children moving in with parents, overcrowding and households living in caravan parks … people at the frontline are telling us homelessness is the worst they’ve seen it.”
Greenhalgh said low vacancy rates, interstate migration and global supply chain issues were contributing to escalating rental prices, however the pressure could be alleviated with further government support.
“What would make an immediate difference is increases to income support and commonwealth rent assistance … which at the moment is not alleviating rental stress.
“We’re asking the commonwealth to take leadership and develop a national rental reform framework … they’ve come to the party with the National Housing Accord but we’d like to see an escalation in that investment.”
Greenhalgh said traditionally, households would move further out to regional areas to secure affordable housing, but vacancy rates weren’t keeping up with demand.
“In an area where there’s not been a lot of supply any increases in demand has strong ramifications in vacancy,” she said. “And nationally, vacancy rates are 0.9% or in some areas functionally zero. A healthy rate is 3-4% … it’s incredibly low.”
The RAI report’s lead author, Ellen Witte, said slightly falling rents during the pandemic were short lived, with rents now equal or higher rates to pre-2020 levels.
“The pandemic … saw the existing rental crisis spread to the regions, when many households left capital cities,” she said. “Key workers are unable to access housing.”
Witte said floods in the New South Wales northern rivers region this year had a devastating impact on the housing sector, with low vacancy rates placing pressure on existing rental stock and new development.
Lismore was one of the worst affected, where affordability plunged by 10% between 2021 and 2022. The town of Bellingen dropped by 14%. In Queensland, Gympie and Maryborough fell by 17% and 16% respectively.
Witte said city dwellers migrating to the regions in a Covid-induced “tree change” had also compounded rental pressure outside urban areas.
Net internal migration to the regions in March 2021 was about 50% higher than the historical peak.
