November 27, 2019Media Centre Media Releases News

Media Release: Canberra Becomes More Unaffordable to Rent, Pushing People on Newstart out of the Market

Canberra’s inner city and suburbs have become even more unaffordable with rental affordability deteriorating across the city since this time last year, the latest release of the Rental Affordability Index (RAI) has found

Despite remaining acceptable in rental affordability, the ACT has seen a marginal and consistent decline in rental affordability from the December quarter of 2016 to the close of the June quarter 2019.

Many areas across the central city and inner suburbs have moved from moderately unaffordable to unaffordable over the last 12 months. The spread of suburbs that have shifted from acceptable to moderately unaffordable is particularly apparent in the north and south, including throughout Tuggeranong.

The ACT remains the second worst performing capital city for lower income households needing to rent, as rents are pushed up by higher than average incomes in the nation’s capital. The median rental household in the Australian Capital Territory has a gross income of $100,600 per annum.

For those on higher incomes, the ACT offers acceptable rents. But for those on low incomes, including Newstart, it’s a different story. For example, renting would cost the following groups:

• Single person on Newstart Allowance: 115 per cent of income (extremely unaffordable)
• Single pensioner on benefits: 75 per cent of income (extremely unaffordable)
• Couple pensioner on benefits: 51 per cent of income (severely unaffordable)
• Single part-time worker parent on benefits: 62 per cent of income (extremely unaffordable)
• Single working parent: Student share house: 34 per cent of income (unaffordable)
• Full-time hospitality worker: 39 per cent of income (severely unaffordable)

Canberrans on Newstart seeking to rent privately would find themselves completely priced out of the ACT market, having to spend more than they receive – an unachievable 115 per cent of their income – to rent a one-bedroom apartment.

In the ACT, affordability for a person on Newstart improved significantly between 2012 and 2015 but has worsened over the past four years.

Adrian Pisarski, Executive Officer, National Shelter, said: “There is not one place in Australia where a Newstart recipient can rent affordably.

“The RAI evidence is conclusive: all Newstart recipients who are renting are living in poverty. The situation is only marginally better for single and dual pensioners who also face unaffordable rents everywhere in Australia.

“The implications for retirement incomes policy are dire with more people retiring without owning and facing a completely unaffordable rental market.

“We know older women are the fastest growing cohort experiencing homelessness and we’d expect increased rates of homelessness among older people based on these findings,” Mr Pisarski said.

Ellen Witte, Partner at SGS Economics and Planning said: “People on Newstart are the most vulnerable cohort in the country as they experience the worst levels of housing stress. Required to pay 77 per cent of income or more on rent, these households are pushed to the outer fringes of the cities with poor connections to jobs and education.

“After paying the rent there are not enough resources left, and people may not even be able to fork out money to go to a job interview. There is an urgent need to raise the Newstart allowance and provide these households a pathway out of the poverty trap.”

 

James Barron, Head of Relations at Community Sector Banking, said: “Looking beneath the headline figures, rental stress is affecting the majority of very low-income households in Australia.

“People on Newstart are being hit particularly hard. Even in cities with higher than average incomes and better than average rental affordability, the plight of low-income renters continues to deteriorate.”

Conny Lenneberg, Executive Director of the Brotherhood of St Laurence, said: “The evidence is utterly compelling: the deeply inadequate Newstart rate is a driver of homelessness. This is not the ‘fair-go’ society we cherish.”

“With high rents, single older job seekers and families with young children are in the eye of the affordable housing storm across the country. We are seeing increasing disparities, and the crisis end of this challenge is visible on our streets.”

Ms Lenneberg said there was also an urgent need to increase subsidised social housing. “Our social security safety net is letting down fellow citizens. There is an urgent need to raise Newstart and its very modest rental supplement and to increase subsidised social housing.”

The RAI is an indicator of the price of rents relative to household incomes based on new rental agreements. It is released annually by National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence.

A score of 100 and below shows that households would be required to spend at least 30 per cent of their income on rent. While a score of 100-120 shows that households are facing moderately unaffordable rents. Canberra now has a score of 129.

 

Link to interactive map:

https://www.sgsep.com.au/projects/rental-affordability-index

MEDIA: Andrew Blyberg on 0401 691 666 or [email protected]

Interview opportunities are available with:

• Adrian Pisarski, Executive Officer of National Shelter
• Ellen Witte, Partner at SGS Economics and Planning
• James Barron, Head of Relations, Community Sector Banking
• Conny Lenneberg, Executive Director of the Brotherhood of St LaurenceLink to interactive map:
• http://www.sgsep.com.au/maps/thirdspace/australia-rental-affordability-index/ 

  About the Rental Affordability Index

  National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence have released the Rental Affordability Index (RAI) biannually since 2015. The RAI is an easy to understand indicator of the price of rents relative to household incomes.

   About National Shelter

  National Shelter is a peak advocacy group whose mission is to create a “more just housing system, particularly for low-income Australian households”.

  About SGS Economics & Planning

  SGS Economics & Planning is a leading planning and economics firm whose purpose is to shape policy and investment decisions to achieve sustainable places, communities and economies.

   About Community Sector Banking

  Community Sector Banking is the not-for-profit banking specialist for more than 17,000 organisations; it’s a joint venture between Bendigo Bank and the Community 21 consortium of not-for-profit organisations.

  About Brotherhood of St Laurence
  The Brotherhood of St Laurence is a community organisation that works to prevent and alleviate poverty across Australia.