Despite falling rents, affordable rentals at all-time lows

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By Leith van Onselen

The ABS’ latest CPI data showed that housing rents nationally have registered zero growth in inflation-adjusted terms over the past five years (see my earlier post):

Despite this, the number of affordable rental properties is at all-time lows according to a Anglicare’s latest Rental Affordability Snapshot. From The ABC:

Each year the organisation’s annual Rental Snapshot reviews the number of available rental properties available on a single weekend.

This year, out of 67,000 properties surveyed, the research found less than 1 per cent were affordable for pensioners and those on other Centrelink benefits, or those earning the minimum wage.

Rental stress is defined as a household paying more than 30 per cent of its income to a landlord.

But the report found that for some households the rent could take up to around 50 per cent of income, leaving tenants unable to pay for basics like electricity and other utilities — or even put food on the table…

Director of advocacy at Anglicare Sue King said they had been seeing more and more people coming through to their emergency relief centres because they were “just not coping”.

“We’ve been conducting this particular survey for the last seven years,” Ms King said.

“And even though every year it has been quite dire in terms of the number of affordability rentals available for people on benefits, or for people who are on minimum wage, this year is probably the worst year that we have ever seen.

Ms King said while finding a rental property had always been hard for people living on the minimum wage, “this year there are less and less affordable [options]”.

“Particularly for single people who are working on the minimum wage, single people on Newstart, single people on disability support benefits — there is absolutely nothing available,” she said.

“And another concern are people who are single on the aged pension, the numbers of available properties have virtually halved for them.

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The Guardian’s Greg Jericho has produced a neat chart showing that growth in the minimum wage has at least outpaced rents over recent years:

That said, the massive increases in rents in the mid-2000s have not yet been undone:

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Over the past decade, while the minimum wage has risen 31%, and inflation has gone up 27%, rents have soared 48%. It is much less affordable to rent now than it was a decade ago:

The aggregate data also hides the acute rental pressures being felt in specific locations. For example, rents in Sydney are highly unaffordable to vulnerable Australians, as illustrated recently by CoreLogic:

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There is also a shortage of affordable ‘family-friendly’ dwellings available for rent (e.g. 3-bedroom houses).

While Anglicare supports the Coalition’s proposed rental bond aggregator model, it also wants the government to “wind back negative gearing and capital gains tax exemptions, and redirect funds saved into public and community housing”, as well as implement “a national renter’s rights plan that delivers consistent and fair renting conditions for all Australians”.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.