Rental affordability has continued to nosedive in Hobart, keeping its record as the least affordable city in Australia for renters, the latest release of the Rental Affordability Index (RAI) has found.
For the first time, the rental affordability score for Hobart has dropped below the critical threshold of 100. At 93, its RAI indicates that even an average income household in Hobart would be placed in rental stress if paying the current median rent.
Hobart is the least affordable capital city in Australia, with households earning a moderate income paying close to 32 per cent of their income on rent.
Affordability for renters in Hobart has fallen 20 index points in the past three years as income growth has failed to meet increasing rent levels in the city. Low incomes and an inadequate supply of rental housing continue to drive this decline in rental affordability. Renters in Hobart are likely to experience difficulty affording essential costs of living, such as food, heating, medicine and transport.
Areas including Hobart, Sandy Bay, West, North Hobart and Kingston remain unaffordable, with some parts of central Hobart, South Hobart, Taroona, Geilston Bay, Risdon and Lindisfarne severely unaffordable.
Ellen Witte, Partner at SGS Economics and Planning, said: “Hobart is in the midst of a rental crisis, the worst in the country. The rents have been increasing by 10 per cent per annum over the last three years. No matter how hard you work, you won’t be able to keep up with price rises like this.
“The market is failing and there is an urgent need for the government to intervene. There is a lack of new supply, while stock is being lost to the short-term holiday accommodation market. The rights of renters are weak, and the Tasmanian Residential Tenancy Act needs to be reviewed like Victoria has done.”
Hobart was significantly more affordable than other cities in 2011 but has seen a sharp decline in affordability since 2016, caused by rents rising much faster than incomes and Newstart payments.
“People on Newstart are the most vulnerable cohort in the country as they experience the worst levels of housing stress.
“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.”
People on Newstart are under the greatest rental stress in Hobart, spending 86% of their income on rent, pushing them to the outer fringes away from opportunities for employment.
All low-income households in Hobart face unaffordable rents to a severe or extreme level:
- Single person on Newstart: 86 per cent of income (extremely unaffordable)
- Single pensioner on benefits: 56 per cent of income (severely unaffordable)
- Couple pensioner on benefits: 40 per cent of income (severely unaffordable)
- Single part-time worker parent on benefits: 49 per cent of income (severely unaffordable)
- Student share house: 50 per cent of income (severely unaffordable)
Adrian Pisarski, Executive Officer, National Shelter, said: “There is not one place in Australia where a Newstart recipient can rent affordably.
“Newstart renters in metro Sydney require 4.5 times their current income to achieve affordability. The most affordable places we have are in regional SA and even there someone on Newstart needs to pay 47% of their income to rent.
“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.
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.”
Regional rental affordability drops
With a RAI score of 116, the average household seeking to rent in regional Tasmania would be facing rent levels at around 26 per cent of its income.
Towns in northern and eastern Tasmania, including Devonport, have become acceptable. Launceston, however, has shifted from acceptable to moderately unaffordable over the past 12 months.
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 on the RAI shows that households would be required to spend at least 30 per cent of their income on rent. A score of 100-120 shows that households are facing moderately unaffordable rents.
MEDIA: Andrew Blyberg on 0401 691 666 or firstname.lastname@example.org
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 Laurence
Link to interactive map:
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.