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Australia's private rental market is unaffordable not just for low-income households but median income earners are also struggling to make ends meet as well.
Around 35 per cent of Australian renters are experiencing housing stress and it's expected the nation will face a shortfall of half a million social and affordable dwellings over the next decade.
Social housing provider Compass Housing has released the Affordable Housing Income Gap Report which reveals a growing divide between renting households and income levels to avoid housing stress.
Housing stress is experienced by households paying more than 30 per cent of their income on housing costs.
Property prices in Australia’s capital cities increased by 82 per cent between 2006 and 2016. Median rents for this period increased 76 per cent, explains the Compass Housing Services Report.
In comparison, household incomes increased by 40 per cent for this 10 year period, and wages only grew by 39 per cent.
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| Annual income to afford a 3br house | Amount above annual median income (AHIG) | Annual income to afford a 2br unit | Annual amount above median income (AHIG) | |
|---|---|---|---|---|
| Inner Sydney | $172,467 | $78,139 | $121,333 | $27,005 |
| Inner Melbourne | $130,000 | $50,336 | $93,600 | $13,936 |
| Inner Brisbane | $94,987 | $17,299 | $83,200 | $5,512 |
Compass spokesperson Martin Kennedy says housing stress isn't just a problem for low-income households, but working families with average incomes struggling to afford suitable rental properties close to where they work.
“In some cases the amount of additional income required to avoid housing stress is greater than the household’s entire current weekly income.”
Sydney is the nation’s largest property market, and notoriously the most expensive.
To avoid housing stress on a three-bedroom house in Sydney’s inner-ring, the typical renting household requires an additional $1503 per week or $78k per annum.
If renters move further afield to Sydney’s middle-ring for a two bedroom dwelling prices drop drastically, with a typical rental household requiring an additional $186 per week, or $9672 per annum.
In Sydney the 76 per cent increase in rents was partially offset by a 51 per cent increase in household incomes for the 10 year period.
The overall situation for renters in Melbourne is arguably worse than those renting in Sydney, according to the report, due to slower income growth over the period.
Melbourne renters have seen a 75 per cent increase in rents yet only a 43 per cent rise in incomes for the same period.
To avoid housing stress on a three bedroom house in Melbourne’s inner-suburbs they typical renting household would require an additional $968 per week, or $50k per year.
Well known for its greater affordability in comparison to its southern counterparts, Queensland property prices have increased steadily but at a more modest pace.
Brisbane rents increased 61 per cent over the decade while income growth was also slower increasing 40.5 per cent over the same period.
To combat the nation's affordability issue, the report recommends the creation of a national housing plan with initiatives across all levels of government.
This includes the construction of 500,000 social and affordable housing dwellings across the next 10 years.
A tax review to strike a fairer balance between the level of support provided to investors, first home buyers and renters, and a reform in state tenancy laws to provide greater security of tenure for renters.
