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political reporter Tom Lowrey

Support needed to help millions of Australian renters with rising cost of living, experts say

Around a third of Australians are currently renting their homes. (ABC News: Luke Bowden)

If there was one clear message out of last week's federal budget — the government's springboard into an election campaign — it was tackling the cost of living.

The fuel excise has been halved, welfare recipients will receive one-off payments, and there is tax relief coming in a few months too.

On the housing front, schemes to help first-home buyers crack the market are being expanded dramatically, aimed at helping people buy with smaller deposits. 

But there is a large group of Australians — including many of the country's poorest — who missed out on targeted relief.

One third of Australians are currently renting, making up 2.6 million households.

Currently, 14 per cent of them are experiencing rental stress, with more than 30 per cent of their income going to rent.

Some economists argue if the government wanted a cost effective measure to help ease cost of living pressures, it should focus on ways to assist renters across the country.

It's estimated one in every seven rental households in Australia are experiencing rental stress. (ABC News: Natasha Johnson)

'It made me furious'

The morning after last week's federal budget, the Prime Minister was asked on Nine's Today Show why nothing was being done about rent relief.

Scott Morrison replied that there was.

"It's about Australians getting into homes," he said. 

"The best way to support people who are renting a house is to help them buy a house."

Among those watching that interview was Chantelle Carr, who recently started renting in Kununurra, in WA's Kimberley region.

"I just felt that he was very out of touch, and has no idea about the cost of houses and the cost of rent," she said. 

Chantelle Carr struggled to find an affordable place to rent in Kununurra. (Supplied: Chantelle Carr)

Ms Carr only recently moved the region from Victoria to take up a job in healthcare.

She said it was only through good luck, and word-of-mouth, that she found a place to live in the town's tight market.

"I either would have had to try my luck with finding a room in a share house, which weren't very common," she said.

"A lot of people were saying that you could live in their caravan, but that was also $250 a week.

"Or I would have had to have stayed in a cabin in one of the caravan parks long-term, which was nearly $400 a week, so nothing affordable."

Ms Carr said simply buying a house to solve her rental issues was not an option.

"No one I know would just go 'oh, great, we'll just go out and buy a house'," she said.

"They have to be settled in an area, they have to want to live there long term, they also have to have a permanent job. 

Rental stress worst in some key marginal seats

Unlike recent federal elections, housing policy is not shaping up as an area of major contest between Labor and the Coalition.

But an analysis of rental stress across the country conducted by the ABC shows it is a particularly acute problem in some politically critical areas.

In the Melbourne seat of Chisholm, one of the Coalition's most marginal seats, more than one in five rental households is in rental stress.

The figure is only marginally lower in the Tasmanian seat of Bass, centred on Launceston, which is the Coalition's most marginal seat. 

The Liberal-held Sydney seat of Reid is also on a small margin, and the Labor-held seats of Richmond and Macnamara are held by less than five per cent.

However, despite widespread talk of a housing crisis, the scale of Australia's rental crisis, if indeed it exists, is lesser.

In broad terms, rental housing has become more affordable over the past decade. But in most places, rent has not kept pace with sluggish wage growth.

Still, the rental market is far from even.

Hobart has a dire shortage of properties, with that scarcity causing prices to rise sharply.

But it is a buyers' market for tenants in Perth and Darwin, where most rents are actually lower now than they were 10 years ago.

Economist Ben Phillips, from the Australian National University, argues even without rents soaring, a significant number of people are struggling to keep up.

"There seems to be some heightened level of inflation in the rental market, but at this point, I don't think it's out of control for most renters," he said.

"But that's not to say there isn't a problem with rental affordability — there is one, and has been for many years. 

Hobart has seen the sharpest increase in rental prices over the past decade. (ABC News: Luke Bowden)

Increase to 'patently insufficient' rent assistance needed

The government's key measure to assist renters is around $5 billion in rent assistance, paid out each year.

It is targeted towards people already receiving another form of welfare, like pensioners, the unemployed and those receiving Youth Allowance. 

For a single person renting alone, it is capped at around $73 per week, and is lifted twice a year in line with CPI.

Ben Phillips said if the government wanted to provide immediate cost-of-living relief to renters, lifting rent assistance would be the simplest solution.

"I think for the for the short term, and probably the long term as well, lifting rent assistance is probably the easiest way — and probably the most sensible way — for the federal government to go some way towards addressing the housing affordability problem for renters," he said.

Urban planner Nicole Gurran, from the University of Sydney, said the rent assistance payment has been too low for some time.

"The government's own figures show that at least 30 per cent of recipients of that rental subsidy remain in rental stress, even after receiving it," she said.

Nicole Gurran says the rental assistance payment needs to be increased. (ABC News: Dan Irvine)

She said if the government wanted to improve the cost of living, increasing the rental assistance payment was a logical solution.

"Renters, particularly lower income renters, are bearing the brunt of Australia's cost of living pressures," she said. 

Should house prices be the focus?

Much of the political debate around housing in recent years has centred on soaring house prices, and the increasing number of hurdles for first home buyers trying to enter the market.

At the last election, Labor campaigned on ending tax breaks for property investors to improve housing affordability.

More recently, the federal government has been eager to promote its deposit-guarantee schemes, and parliament conducted a lengthy inquiry into what can be done to improve housing affordability for those looking to buy.

Ben Phillips argued the focus on home buyers was possibly misplaced.

"Australians have become obsessed with housing and house prices," he said.

"And really the housing affordability story, I think, is as much if not more about low income renters, as it is about people getting into the market."

Nicole Gurran also doubted how serious politicians were about improving conditions for home buyers, and renters too.

"You'd be forgiven for thinking that the government, for all its talk about wanting to improve housing affordability, that governments and politicians on both sides of the fence are actually terrified at the prospect of house prices actually moderating or falling," she said. 

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