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Australia faces housing affordability crisis

21 June 2016 Reporter

A new report has found that national housing affordability is being threatened by low wage growth and rising rents.

The Rental Affordability Index revealed the lowest-income households in Australia are paying up to 85 per cent of their income on rent, while it is generally accepted that a household is in housing stress if it pays more than 30 per cent of its income on rent.

The index, created by National Shelter, Community Sector Banking and SGS Economics and Planning, highlighted the affordability of every state except Victoria and reinforced calls for policy reform to address rental and housing affordability.

According to the report, Sydney is the least affordable metropolitan area in the country, since there has been no relief for the average household near the city centre in meeting housing costs.


Rental affordability in Brisbane has decreased over the past two years due to income growth declining by 0.2 per cent, while rents have increased by 2.5 per cent.

In greater Perth, affordability has improved over the past two years, with greater affordability in regional WA possibly due to a downturn in mining activity.

Over the past three years, household incomes in Adelaide rose 7.5 per cent while rents climbed 1.7 per cent; however, the city is still classified as ‘moderately unaffordable’.

After Sydney, Hobart is the least affordable city due to its relatively low incomes and high rental yields.

Adrian Pisarski, executive officer of National Shelter, said the latest index highlights many rental households are falling into poverty and are being pushed to suburban fringes due to high rents.

“Australia’s lowest-income households – those on around $500 a week – are paying up to 85 per cent of their income on rents,” he said.

“Middle-income households are also falling into housing stress, as high rents chew up incomes that aren’t keeping pace with rising housing costs.”

Mr Pisarski highlighted the need for a national strategy to address the increasing housing stress.

“Government cuts over the past five years, including cuts to the National Rental Affordability Scheme, have only contributed to the current rental crisis,” he said.

“We need concrete action from all governments, in partnership with the community sector, to alleviate this rental affordability problem.”

[Related: Negative gearing debate heats up as election looms]


Australia faces housing affordability crisis
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