Low income earners continue to be the hardest hit in the ongoing rental crisis, with renters in Sydney, Hobart and Canberra all but priced out of the market.
According to National Shelter and SGS Economics and Planning’s Rental Affordability Index (RAI), Sydney is now equal with Hobart as the least affordable rental housing market in the nation, posting its worst result since 2017.
While the median rental price in Greater Sydney in June 2023 of $650 had increased $100, or 18.2 per cent in the year prior, average rental household income in Greater Sydney only increased 2.4 per cent – representing a 13 per cent deterioration in rental affordability in the past year.
Shelter NSW, Chief Executive Officer, John Engeler said Sydney is beyond the point of ringing alarm bells about the city’s rental affordability.
“This deep and entrenched crisis demands a significant expansion of social and affordable housing, stronger renters’ rights and a realistic level of Commonwealth Rent Assistance,” Mr Engeler said.
“Truly affordable rental housing needs to be secured for these households.”
The problem is especially pronounced among very low-income households whose share of household income going towards rent is significantly higher.
For low income earners, such as single people on Jobseeker, single or coupled pensioners, and single part-time workers or parents on benefits, rents were classed as either extremely unaffordable or severely unaffordable.
People on lower incomes, such as hospitality workers, were forced to pay 43 per cent of their income on rent, which was considered extremely unaffordable.
The research found that the average rental household generally must travel 15-20km from the CBD to areas such as Campsie and Lakemba in Sydney’s south, or Rosehill and Parramatta to the west, to find acceptable rents.
This means key workers on modest incomes in industries such as health, aged care, retail or hospitality, suffer longer commute times across Sydney.
The situation is equally as troubling in Canberra, with every ACT suburb was considered either unaffordable or severely unaffordable for students in share houses, low income earners and pensioners.
Every suburb in central Canberra is moderately unaffordable compared to the average household, while areas near Tuggeranong in the south and Gungahlin in the north, have returned to acceptable levels.
ACT Shelter CEO Travis Gilbert said low income earners simply can’t afford to live in Canberra.
“While the Index has consistently shown people on JobSeeker have been pushed to the margins and into poverty in the ACT since its first release, the brutal home truth this RAI tells us is every Canberran household with an income of less than $1000 a week has been priced out of the option of a second bedroom by our private rental market,” Mr Gilbert said.
“There is an urgent need for public investment to remedy market failure.”
Renters in Greater Melbourne are also doing it tough, with the RAI showing an average rental property costs 24 per cent of the average household income of $108,955.
For people on low incomes such as single people on JobSeeker, single or coupled pensioners, and single part-time worker parents on benefits, rents were classed as either extremely unaffordable or severely unaffordable.
National Shelter CEO, Emma Greenhalgh said in Melbourne, students and people on lower incomes are priced out of entire swathes of the city.
“The rental market is fundamentally broken,” Ms Greenhalgh said.
“Melbourne’s rental market is in a crisis and it’s only getting worse.
“This disproportionately punishes people with the least while also pricing full-time and essential workers out of their own city.”
Across Adelaide, the average metropolitan rental household, earning $87,000 a year, would struggle to find an affordable rental in the private market, and faces paying 27 per cent of their income if they are renting at the median rate.
What was previously deemed ‘affordable’ in the corridor from the southern suburb of Bellevue Heights to Gillman in the north has completely disappeared since 2022.
Renters now have to look at least 30km from the CBD to find something more affordable.
Shelter SA CEO Dr Alice Clark said what’s happening in Adelaide shows that Australia’s rental market is being pushed to the brink of disaster through a combination of soaring prices and low supply.
“Even moving to the regions does not provide affordability relief anymore,” Dr Clark said.
“Outside of Adelaide, rents have risen 12.9 per cent in the last year while affordability has declined by 8 per cent, adding even more pressure to rental households, who have even lower average incomes of $76,000 a year in the regions.”
Principal at SGS Economics & Planning, Ellen Witte, said unaffordability has also spread from the cities to regional areas.
“Households will have to live further away from where the jobs are to access affordable rents, and businesses are struggling to find workers,” Ms Witte said.
She said strong reform was needed.
“This downward spiral has now reached the point where very few affordable long-term rentals are on offer,” she said.
“We need to attack this problem from multiple angles.
“This means expanding social and affordable housing, rethinking how we use tax subsidies and strengthening renters’ rights.”