Rental affordability at ‘worst level on record’
Low- and middle-income households are bearing the brunt of the steepest rents in Australian history.
New data from REA Group revealed that rental affordability nationwide is at its worst level in at least 17 years, when the group’s records began.
Between July and December 2023, just 39 per cent of the rent properties advertised on realestate.com.au were affordable for a median-income household spending 25 per cent of their income on rent.
Conditions were worst in NSW, Tasmania and Queensland, with typical-income tenants in NSW able to afford just 28 per cent of advertised properties.
Most concerningly of all, the research found that “a household earning $49,000 per year – the 20th percentile of income – can afford essentially no rental properties”.
According to PropTrack senior economist Angus Moore, rental conditions have rapidly deteriorated since the COVID-19 pandemic.
“Over the six months to December 2023, households across the income distribution could afford to rent the smallest share of advertised rentals since at least 2008, when our records began. That is a substantial change from conditions before and during the pandemic,” Moore said.
Moore explained that the decline in rental affordability “has been driven by the significant increase in rents that we’ve seen since the pandemic, which wages have not kept pace with”, noting that rents have risen 38 per cent since the beginning of the pandemic.
He stressed that the affordability crisis is most severe for Australians earning low incomes.
“This highlights the importance of rental support for low-income earners, such as Commonwealth Rent Assistance,” the economist said.
“Without support, renting would be effectively impossible for many of these households.”
Over the long term, Moore stated that the most effective solution is to increase housing supply.
“Increasing the availability and supply of rentals is critical to improving affordability,” said Moore. “Rents are growing quickly because rentals are extremely scarce at the moment, with incredibly low rental vacancy rates around the country.”
“The only way to solve that, sustainably over the long term, is to have more rentals where people want to live. And that means building more homes,” Moore concluded.
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