According to the SGS Economics & Planning Rental Price Index (RAI) report, the proportion of renter households is rising.
The share of renter households increased from 25% to 30% between 1995 and 2015, and the affordability of rental housing continues to be a problem, particularly for retirees and seniors who are retiring.
Over the same 20-year period, housing costs for renter households also increased relative to those of homeowners. In fact, tenants currently spend 20% of their income on shelter costs, while homeowners with mortgages allocate an average of 16%.
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Cost Drivers
According to the RAI report, a series of factors led to the shift to rental and the increase in rental costs.
"Since the introduction of the capital gains reduction in 1999, which, combined with a negative gear, has significantly increased the number of investors competing with homeowners for available property, more of households were drawn into the rental market, "the report says.
The low interest rate environment also played a role, making lending more accessible to investors.
Vacancy rates also boosted rents, especially in downtown areas. For many investors, vacant properties "are still worth preserving" and are often held back for long-term capital gains, the report says.
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Most Unaffordable Cities
Greater Hobart remains the most unaffordable capital for rental. It is the only capital where the affordability of the rental for the middle-income household has fallen below the critical threshold.
"This means that even middle-income households now spend 30% or more of their income on rent, and while household incomes in Tasmania are well below the national average, rents are only marginally below the continent average, "says the report.
The table below presents the index of affordability of metropolitan areas in June 2019.
Summary of the cost of renting – Metropolitan areas
Region
Index of Financial Accessibility
Share of income spent on rent (%)
affordability of rent
The Greater Sydney
119
25
Moderately Unapproachable
Greater Brisbane
127
24
Acceptable
The Great Adelaide
112
Moderately Unapproachable
The Great Hobart
32
Unaffordable
Greater Melbourne
128
23
Acceptable
The Greater Perth
21
Acceptable
ACT
129
23
Acceptable
As shown in the table above, Adelaide has become more expensive than Sydney. This is due to the slow growth of the city's income.
"While the affordability of rents in Sydney has improved, the difference for very low income households is negligible and the inaccessibility remains serious," the study said.
The most affected households
The term "unsustainable" describes the rental situation for single Australians in Newstart. In order to live in any capital, Australians in Newstart must pay more than 77% of their income for rent.
This segment of households faces the largest financial challenge in leasing in metropolitan and regional areas.
"The stress of rent drives singles to Newstart on the outskirts of our cities, far from the possibilities of finding them on the job market," the study said.
In fact, affordability has not improved for this segment, as capitals become significantly more expensive.
"Newstart's payments are continually being overtaken by rising rents and other increases in the cost of living.All cities are" extremely unaffordable ", Sydney being the worst and evolving little during this period ", says the study.
The affordability of rents is also "extremely low" for single retirees. Living in metropolitan areas would force them to spend 50% of their retirees' income.
Older Australians Need Help
Expressing on the findings of the study, COTA Australia Executive Director Ian Yates said that it was necessary to increase the number of accessible and affordable social housing located near transport and local communities.
"Older Australian tenants are among the most affected by the lack of affordable and appropriate housing because they live on a fixed income with limited income potential and are entirely at the mercy of market forces and the ability to live with them. instability of rents, "said Yates.
To help renters, Yates said that maximum rent assistance should be increased by 40%.
"Not only do older renters tend to have higher health care costs, but they also need to be close to their communities, their transportation and their services to stay healthy and connected. more people who reach retirement, rent stress and homelessness will continue to grow "We can not afford more inaction," he said.
