Low-income Australians are completely priced out of the rental market, with housing affordability worse than pre-pandemic levels in some areas, and Hobart is now the least affordable city for renters, an analysis has found.
The annual Rental Affordability Index (RAI) for 2021, released on Wednesday, shows while household incomes in Tasmania are significantly lower than the national average, rents are only marginally lower than on the mainland and the gap has been widening over the past four years.
Rapid rises since 2020 have in the last financial year made the Tasmanian capital the most unaffordable it has ever been.
For a single person on a jobseeker payment, all metropolitan and regional areas are severely or extremely unaffordable, the report found.
The RAI examines national rental bond data against the average incomes of different types of renting households. Rental stress is defined as housing costs exceeding 30% of a household’s gross income, with 38%-60% representing severe unaffordability and 60% or more indicating extreme unaffordability.
A single person solely reliant on jobseeker payments and rental assistance would require an income nearly triple the current level of about $19,802 per annum to move into the “acceptable” affordability category, in which only 20%-25% of household income went on rent.
The situation is similar for single-pensioner households seeking to rent a one-bedroom dwelling, with moderate to extreme unaffordability throughout the country, including in regional areas.
Even a single person on a full-time hospitality income of approximately $59,344 a year was destined for moderate to severe rental stress if they were working in the major capital cities, especially Canberra and Greater Sydney.
Adrian Pisarski, executive officer of advocacy organisation National Shelter, said there was “nothing affordable for any low income group” across the country and the lack of affordable housing in regional areas was concerning.
“There’s effectively nothing available right up and down the east coast of Australia for people even on an average income in those regions,” said Pisarski, whose organisation produced the RAI report with SGS Economics and Planning, the Brotherhood of St Laurence and Beyond Bank Australia.
Rents in Sydney and Melbourne have shifted unevenly, with the inner city becoming more affordable while the outer suburbs became more expensive.
That uneven adjustment can be traced to the exodus of international students and migrant workers from the city when Covid hit, as inner-city households shifted to larger houses with more space to work from home – a pattern seen across the cities.
The relatively stable situation for renters with average incomes masked “a really nasty and growing problem for people on low incomes”, Pisarski said.
“Homeowners have had relief through low interest rates which have made repayments sustainable for those that have mortgages, but renters never get any relief at all. Rents keep going up and unaffordability gets worse.”
Melinda*, 63, lives in a regional town on the eastern seaboard. (Guardian Australia has chosen to use a pseudonym for her due to the precariousness of her situation.) Melinda receives the Newstart allowance, which she needs to survive despite being a working artist.
She has lived with the trust and tacit approval of her landlord for seven years in commercially zoned premises that she also uses as a studio and workshop space. It is the only place in town she can afford – she got it cheap thanks to the building having sustained storm damage – and she spends 70% of her Newstart allowance on rent.
“Rents are absolutely insane, especially in this area,” Melinda told Guardian Australia. “I came here because the rent was cheaper, but that’s changing. Even if you’re working I don’t know how people afford it.”
There is no bathroom or shower in the building, only the shared office toilets. Because she does not have a residentially zoned address, she cannot vote, claim rental assistance from Centrelink or get a no-interest loan from a social service provider.
Prior to moving into the studio, Melinda spent 18 months living in her car.
She counted herself lucky, she said. “The sacrifices we’re willing to make to retain our autonomy! If I didn’t have this place, I’d be back living in my car. And that was horrendous. It’s a horrible way to live.”
Melinda’s story is not unique, Pisarski said.
“We’ve seen an acceleration of older people’s homelessness in the last few census, but I suspect this is really biting much harder now,” Pisarski said.
“Our whole pension system is based on the idea that you own your own home. But if you have to rent and you’re paying 60% of your pension just to rent – which is common – it just doesn’t leave you with enough money to live on. Especially at that point in your life when your health is deteriorating.”
National Shelter is calling for governments to replenish the national supply of social housing stock.
“People who want to buy a house rent for as low as they can to build a deposit. That puts pressure right through the rental market and pushes lower income households out of affordable housing,” Pisarski said.
“Having a sufficient supply of social housing helps the overall housing market. It takes pressure out of the rental market but it takes it out of ownership as well. Every part of this is connected.”
