The areas where rental affordability is improving since the height of the coronavirus pandemic, including what is Australia’s most affordable capital city has been revealed.
New analysis shows how the pandemic disrupted the rental market across Australia, with prices falling in many cities — but the Rental Affordability Index (RAI), released this week, found rent is still unaffordable for low income earners in every capital city.
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The RAI is an annual report that looks at new rental agreements and affordability for different income groups — including the unemployed, pensioners, two-income families and single households. It is released by Bendigo and Adelaide Bank, SGS Economics & Planning, National Shelter and the Brotherhood of St Laurence.
When it comes to the unemployed, it found that Aussies surviving on JobSeeker payments in capital cities would be paying between 42 to 69 per cent of their income on rent.
This is despite the fact that the $550 coronavirus supplement introduced earlier this year basically doubled the unemployment benefit’s base rate of $565.70 a fortnight for singles.
“This shows the depth of our rental affordability problem, where even with doubled income support, there is not one place in Australia where a JobSeeker recipient can rent affordably,” National Shelter executive officer Adrian Pisarski said.
It’s generally accepted that low-income households experience housing stress if they pay more than 30 per cent of their gross income on housing.
The situation is expected to get worse as incomes have already deteriorated since the report was done, with the supplement reduced to $250 a fortnight on September 25, and a further reduction to $150 scheduled from January 1.
Mr Pisarski told news.com.au there was a massive need for government investment in social and affordable housing.
“Now is the time for it since borrowing costs are so low in Australia,” he said.
“If there is no action, the net result of our housing system failures will be a dramatic increase in homelessness.”
SGS Economics & Planning partner Ellen Witte said an investment of about $7.8 billion could create 15,500 to 18,000 jobs over four years, add 30,000 social housing dwellings and refurbish aged stock.
The coronavirus has had a diverse impact on rental prices, with the greatest falls in prices in Greater Melbourne (-7 per cent), Greater Hobart (-6 per cent) and Greater Brisbane (-6 per cent).
Ms Witte said rents fell by between 2 and 7 per cent across Australia between March and June this year.
Prices in Sydney, Melbourne, Brisbane, Adelaide, Hobart and Perth all dropped but the rise of remote working has seen a shift into regional areas, leading to increased prices in these areas including in Queensland.
“Hobart still remains the most unaffordable city in Australia,” Ms Witte said.
This is followed by Adelaide, which is the second most unaffordable capital.
The report found renters in Hobart had an average household income of $66,000 a year and faced paying about 31 per cent of their income on rent if renting a dwelling at the median rate.
This compares with 21 per cent in Greater Perth, which is the most affordable capital.
Affordability also deteriorated in regional Tasmania and the state had the most unaffordable regional area, followed by regional NSW and Queensland. Regional Victoria and South Australia remained relatively unchanged, while regional Western Australia became slightly less affordable.
The average rental household has a gross income of $108,300 a year, which means they would spend around 24 per cent of this on rent at the median rental rate.
The average household must generally travel at least 15 – 40km from the CBD to areas such as Hornsby, Blacktown, Liverpool, and Campsie to find “acceptable rents”.
Kingsford and Daceyville are the only suburbs within a 15km radius of the CBD to offer acceptable rents.
Since the last report, several suburbs in the north and east have become “moderately unaffordable”, including Maroubra, Mossman and Clovelly.
However, some areas have improved their affordability.
Many suburbs in the Parramatta and north west regions that were “moderately unaffordable” a year ago, such as West Ryde, Parramatta, and Westmead, now have “acceptable affordability”.
This is also true of some inner west suburbs, including those from Stanmore to Ashfield.
It’s probably no surprise that inner city harbour suburbs were among the least affordable postcodes.
The average household income for renters is $97,000 a year and this would see around 22 per cent paid on rent if charged at the median rate.
Over the past year, affordability has improved in Melbourne’s inner city, inner north east, and tertiary education precincts.
Areas that were previously unaffordable or moderately unaffordable but are now acceptable, include the Melbourne CBD, West Melbourne, Southbank, South Yarra, and Carlton.
This pattern extends further south east to Hawthorn, Malvern, and Glen Iris.
The same can be seen in Melbourne’s northeast in and around Alphington and Ivanhoe.
While inner city suburbs have improved, affordability in middle ring suburbs in the northeast corridor such as Kew East, Balwyn North, and Eltham South, out to Warrandyte have worsened, shifting from moderately unaffordable to unaffordable.
Other areas of worsening affordability include Airport West and Keilor Park in Melbourne’s
west, and the eastern suburbs of Ringwood, Springvale, and Elsternwick.
Areas on Melbourne’s outer south east have also seen declining affordability, with areas such as Cranbourne and Pakenham shifting from affordable to acceptable.
Coastal suburbs Brighton, Brighton East, Hampton, and Beaumaris have remained unaffordable.
The average rental household with a gross income of $90,000 a year would pay 23 per cent on rent if renting at the median rate.
There has been worsening affordability, from acceptable to moderately unaffordable, in some inner to middle suburbs including East Brisbane and Toowong.
Areas to the north west of the Brisbane CBD around Samford Village that were previously moderately unaffordable, are now severely unaffordable.
But affordability in some middle to outer suburbs have improved, with Ashgrove and Murarrie shifting from unaffordable to moderately unaffordable.
Alderley, Hendra and Mansfield have also shifted from moderately unaffordable to acceptable since the last report.
Adelaide’s average rental household income of $67,900 would see 26 per cent of this paid towards rent if renting at the median rate, making the city the second least affordable capital in Australia.
Almost all inner and middle suburbs in Adelaide are now moderately unaffordable to unaffordable.
But since the previous report, affordability has improved in many eastern suburbs including Urrbrae, Myrtle Bank, Glenunga, Beaumont and Burnside, which have shifted from extremely unaffordable to severely unaffordable.
Some of the north eastern suburbs, such as Salisbury Heights and Brahma Lode have shifted from moderately unaffordable to acceptable.
Adelaide’s coastal suburbs from West Lakes through to Hallett Cove in the south remain unaffordable to moderately unaffordable.
With a relatively low average rental household income of $66,000 a year and a small supply of rental properties, Hobart is the most unaffordable capital city in Australia.
The average household faces paying around 31 per cent of its income on rent if renting a dwelling at the median rate.
Greater Hobart remains the only capital city in Australia where rental affordability for the average income household is below the critical threshold of 100, with a RAI score of 96 in June 2020.
The coronavirus pandemic has improved affordability significantly in several parts of the city, including central Hobart, South Hobart, Taroona, Geilston Bay, Risdon and Lindisfarne. These areas have shifted from being extremely unaffordable to severely unaffordable.
Areas such as Hobart, Sandy Bay, North Hobart and Kingston remain unaffordable.
Notably, the only suburbs of Hobart with acceptable or better affordability are the fringe urban areas of Granton, Gagebrook, Bridgewater, and Brighton.
Affordability has remained stable or begun to improve in the ACT with the average rental household earning a gross income of $103,000 a year.
The territory is considered moderately unaffordable for the average ACT rental household, although bordering on acceptable.
Affordability has improved in Central Canberra, which has shifted from unaffordable to moderately unaffordable, and areas of Gungahlin from moderately unaffordable to acceptable over the past year.
Tuggeranong and Woden remain moderately unaffordable for the average rental household.
Low-income households in the ACT face particularly unaffordable rents, as rents are pushed up by the overall high-income earning workforce. The pandemic has also not reduced rents in the ACT as much as other areas like Victoria and NSW.