Canberra has the most unaffordable rents in the country for students, and people working in hospitality are facing similar crippling costs when they try to rent a house, new figures show.
The situation for people on Newstart and pensioners is worse, described in a new report by SGS Economics and Planning as alarmingly poor, with the ACT second only to Sydney and severely unaffordable for those cohorts.
Australian National University student Apoorva Raghubanshi knows the struggle of contending with Canberra's high rents all too well. She said some weeks her weekly income isn't even enough to cover the rent and she feared falling ill.
"I work casually and my salary depends on the number of shifts, so if I am getting less shifts I can't cover my rent," she said.
"My job is after hours so sometimes it gets very busy and sometimes it's not busy at all.
"It's hard to pay so much and I'm really scared of even falling sick because I am pretty sure I won't be able to afford the medical bills."
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The SGS report judged rent acceptable if is less than 25 per cent of income. Up to 30 per cent becomes "moderately unaffordable" and it gets worse from there. In Canberra, the picture for low income people is skewed by the high average income. Renters in Canberra have a median household income $100,600 a year, which means that overall, rents are judged acceptable.
But for households on lower incomes, a starkly different picture emerges.
The situation for people on Newstart is "untenable" almost anywhere in the country, SGS says. In the ACT, a person on Newstart has to pay more than their entire $18,100 income on rent. If they live alone in a one-bedroom flat, they face paying 115 per cent of income. Only Sydney is worse.
Single pensioners in Canberra, living alone in a one-bedroom flat, pay 75 per cent of their $27,856 income on rent, again second only to Sydney.
Cafe and other hospitality workers in Canberra pay an average of 39 per cent of their income in rent, just behind Sydney on 40 per cent, and well ahead of the other states. The figures, assume the hospitality worker lives alone in a one-bedroom home and has an income of $56,900.
Students in Canberra pay an average of 35 per cent of their income in rent, based on three students renting a share house. The figures assume an income for each student of $25,600. In Sydney, students pay 34 per cent of income on rent, Hobart 30 percent, with the rest of the country well down.
Canberra is especially unaffordable for:
- A single parent with one child under five, on a before-tax income of $39,500, who pays 62 per cent of income on rent.
- Pensioner couples, earning $47,970 and living in a two-bedroom home. They pay 51 per cent of income on rent.
- A couple on the minimum wage, earning $72,300 before tax, who pay an average of 34 per cent of income on rent for a two-bedroom home.
- A family with two children, one under five, and a stay at home parent, living in a three-bedroom house, with a household income of $91,400. That household pays 27 per cent of income on rent.
In each case, only Sydney is worse.
SGS said there had been a "marginal but consistent" fall in rental affordability over three years, with many parts of the central Canberra and the inner suburbs moving from "moderately unaffordable" to "unaffordable". A spread of suburbs in the inner north and inner south and Tuggeranong had slipped from "acceptable" to "moderately unaffordable".
SGS's affordability map shows rents are affordable in much of Belconnen and Gungahlin.
But even for households for which Canberra is judged affordable, it still has among the highest rents in the country as a proportion of income. A single parent working full-time pays 24 per cent of income on rent. Only Sydney and Melbourne are higher.
A couple with children on two incomes pays an average 13 per cent of income on rent, behind Sydney on 14 per cent and on par with Melbourne and Hobart.
SGS says across the country more people are living in rental homes and they pay more of their income on housing than people paying mortgages.
Over two decades from 1995, the proportion of renters had increased from 25 to 30 per cent. Overall renters spent 20 per cent of income on rent, compared with home owners, who spent 16 per cent on mortgage payments.
The shift to renters had been driven by the capital gains discount in 1999 and negative gearing, dramatically pushing up the number of investors who competed with would-be owners to buy homes.
"Investors have pushed out by would-be home owners, so more households with middle to higher incomes are renting for longer. This impacts lower income renters by keeping rents higher," SGS said.
"There is less social and affordable housing stock available than there was a decade ago. As a result, more low-income Australians are pushed into the private rental market and pay unaffordable rents.
"...Too often, the situation is untenable, and renters end up in transitional housing or on the street."
