What is happening with the Australian Rental Market in 2022?

Housing stress is rising across regional Australia, along with every capital city, with the latest Rental Affordability Index (RAI) highlighting that over 40% of low-income households are now in rental stress.

The RAI, released today by SGS Economics & Planning and National Shelter, is used as a key annual indicator of rental affordability in relation to household income.

If one were to spend more than 30% of income on rent, they are considered to be under rental stress, similar to a borrower spending more than 30% on their mortgage repayments.

The report found that regional areas have been the hardest hit by decreasing rental affordability, with Hobart being the least affordable city followed by Sydney and Brisbane,

However, each capital city has taken a hit in their affordability.

In Sydney, rental affordability has declined in the past year despite moderately improving during the lockdowns.

The news comes following a paper that was released by AHURI last week, which called for more affordable, well-located houses.

Brisbane was considered “moderately unaffordable” for the first time, while Perth is at its lowest rental affordability rate since 2016.

Melbourne, surprisingly, is the most affordable capital city in Australia, with the RAI report noting that the average rental household has a gross income of $101,300.

For a single person on JobSeeker, no one could afford the rent – in regional South Australia, rent would make up 48% of income while in the ACT it would make up 117% of income.

Data from SQM Research has also shown the tightening of rental stock nationally, with the vacancy rate below the previous record low in 2006.

Rental affordability declines across the four major cities

Rental Affordability Index, Greater Sydney

Rental Affordability Index, Greater Sydney
Source: SGS Economics and Planning, 2022.

In Sydney, the decline in rental affordability comes after improving significantly since 2017. Since last year, however, this trend has reversed. Many Eastern Suburbs, such as Bondi, Darling Point and Vaucluse, are the least affordable suburbs, with rent representing 36% of average household income.

Rental Affordability Index, Greater Melbourne 

Rental Affordability Index, Greater Melbourne
SGS Economics and Planning, 2022

The narrative is similar for Melbourne, where rental affordability did improve during the pandemic. Brighton and surrounding suburbs are the east affordable in Greater Melbourne, with rent representing 38% of average household income.

Rental Affordability Index, Greater Brisbane

Rental Affordability Index, Greater <a href=Brisbane” class=”wp-image-35567″ srcset=”https://www.qldpropertyinvestor.com.au/wp-content/uploads/2022/12/Rental-Affordability-Index-Greater-Brisbane.jpg 610w, https://www.qldpropertyinvestor.com.au/wp-content/uploads/2022/12/Rental-Affordability-Index-Greater-Brisbane-300×126.jpg 300w, https://www.qldpropertyinvestor.com.au/wp-content/uploads/2022/12/Rental-Affordability-Index-Greater-Brisbane-150×63.jpg 150w” sizes=”(max-width: 610px) 100vw, 610px” title=”What is happening with the Australian Rental Market in 2022? 3″>
Source: SGS Economics and Planning, 2022.

Brisbane also saw an increase in affordability, with this virtually collapsing over the past year. Most postcodes in inner to middle Brisbane remain moderately unaffordable and unaffordable. Areas to the North West and around Samford Valley remain the most unaffordable in Queensland.

Rental Affordability Index, Greater Perth 

Rental Affordability Index, Greater Perth
Source: SGS Economics and Planning, 2022.

While rental affordability has declined in Perth, it is yet to reach the levels from the earlier part of the last decade.

Data highlights chronic failures of government, says housing body

Maiy Azize, the national spokesperson for Everybody’s Home, said that it’s a shame for the “wealthy, lucky country” to have many of its own struggling to live safely and affordably.

“Australia’s housing crisis has reached fever pitch. No part of the country has been spared. Rents are shooting up in towns and regions, and our cities have never been more expensive,” she said.

“It’s clear that the chronic underinvestment in social and affordable housing over the past decade has created a domino effect of housing stress in all corners of the country.

“Stagnant wages, low rental vacancy rates and rising interest rates all add to rental stress but the huge shortfall in social and affordable housing is one of the biggest drivers.

“This report shows that renters spend more of their income on housing compared with homeowners with a mortgage. We are seeing more and more Australians competing in an unaffordable rental market, because there’s less social and affordable housing available compared with a decade ago.”

Ms Azize has called for all levels of government to facilitate the construction of at least 25,000 social and affordable houses each year to meet demand.

“We also need to expand and raise Commonwealth Rent Assistance to ensure people struggling to make ends meet aren’t forced to choose between paying rent or putting food on the table,” she added.

Ms Azize remarks come as research has found that changes to rental laws do not drive investors away. 

Article source: thepropertytribune.com.au

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top