Rental affordability has plunged in the past year with low-income Australians now completely priced out of living alone, a new report has revealed.
The ninth annual National Shelter-SGS Economics and Planning Rental Affordability Index has found affordability has worsened in the past year in every capital city except Hobart and Canberra.
Sydney, Melbourne and Perth have seen their rental affordability rating – a score based on median rental prices and average income of rental households in the area – deteriorate rapidly in the past year, with Sydney’s rating slipping 13% and Melbourne and Perth’s falling 10%.
Only Melbourne and the Australian Capital Territory have what are considered acceptable rents for average-income households, meaning that less than 25% of a household income is being spent on rent. Rents equivalent to 25% of household income are considered moderately unaffordable, while rents of 30% and above are considered unaffordable.
The situation is particularly dire for people on low incomes, with a single person on jobseeker having to spend at least 78% of their income to rent a one-bedroom apartment in any capital city. In Sydney, a one-bedroom apartment would on average cost 137% of their $22,100 annual income, making it the least affordable place in the country.
A single pensioner would need to spend 50% of their income to rent in all capitals except Adelaide and Hobart and at least 32% of their income in regional areas.
Even regions are severely unaffordable with rents in regional South Australia – the most affordable area in the country – still requiring 53% of a jobseeker’s income.
As the cost of living crisis took off this year, Nytarra, who did not want her last name published, put up two people in her home she rents in Seymour in regional Victoria – one of them is living in the study.
With the extra people to split the rent, Nytarra pays $240 a fortnight. She works about 15 hours a fortnight in a cafe, and volunteers with the State Emergency Service. But because she has chronic pain, she struggles to do full-time work.
Her fortnightly pay is $1,000, and she has started to regularly visit food banks and is now using Afterpay to buy groceries. After receiving a notice that their rent would soon increase, Nytarra looked for other options – but nothing in the area was affordable.
“I would love to be in a place by myself … but the amount I’m paying now is less than a single-room unit with no back yard and no parking,” she said.
“In my area, the cheapest thing going at the moment would be a one-bedroom apartment, a little tiny bit, and they’re doing $360 a week.”
One of her friends has offered her a spare room in the house she is paying off, which Nytarra is grateful for. But she says the cost-of-living crisis, coupled with the low jobseeker payment, has meant relying on other people to help.
“We need to increase payments to match their current economic standard of living or lower the mortgage and rental rates, to help people alleviate the cost-of-living crisis,” she said.
The National Shelter chief executive, Emma Greenhalgh, said rental affordability is going “from bad to worse”.
“In the past year, renters have been smashed with enormous rent hikes well beyond income growth,” Greenhalgh said. “With vacancy rates so incredibly low, landlords have been able to pass on interest rate rises to tenants – and the pressure is only set to increase following last week’s rate rise.”
She said affordability would continue to get worse without action. “Governments must urgently address this worsening affordability crisis, including by building more homes and better regulating renting,” she said.