Renters on low incomes, including Newstart, are being forced further and further from Melbourne’s city centre to afford accommodation, affecting their ability to find jobs and access services including education, the latest release of the Rental Affordability Index (RAI) has found.
While overall rental affordability has been relatively stable in Melbourne for four years, it is now worse than six years ago. The average income household in Greater Melbourne faces housing costs at around 23 per cent of their total income.
The most unaffordable suburbs in Melbourne are in the south east, such as Albert Park and Brighton. However, even formerly lower-income suburbs such as Coburg, Thornbury and Preston are now moderately unaffordable for average-income households.
Melbourne is extremely unaffordable for pensioners, with couples paying 48 per cent of their income, and singles an untenable 69 per cent for a new lease. This leaves very little for any medical costs or other fundamental needs.
Rents remain unaffordable for lower income households in Melbourne, for example:
- Single person on Newstart: 106 per cent of income (extremely unaffordable)
- Single pensioner on benefits: 69 per cent of income (extremely unaffordable)
- Couple pensioner on benefits: 48 per cent of income (severely unaffordable)
- Single part-time worker parent on benefits: 58 per cent of income (severely unaffordable)
- Full-time hospitality worker: 34 per cent of income (unaffordable)
Single people on Newstart are suffering most, forking 106% of their income on rentals in Melbourne, a slow but consistent decline over the years. The situation for the single person on Newstart is untenable across the country, with many being pushed out the city, well away from opportunities to get back into employment.
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 also 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 in cities, these households are pushed to the outer fringes 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.”
Regional renters under pressure
Rental affordability in regional Victoria has declined between 2017 – 2019, but the cost of renting has remained acceptable. The median household seeking to rent in regional Victoria faces spending about 25 per cent of their total income on a newly rented property.
However, fringe area commuter cities and towns such as Woodend, Torquay and Ocean Grove are moderately unaffordable to unaffordable.
The RAI is an indicator of the price of rents relative to household incomes based on new rental agreements. Households are considered to be in housing stress when they face a score of 100 or less. A score of 100-120 shows that low-income households are facing moderately unaffordable rents.
The Rental Affordability Index is released annually by National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence.
MEDIA: For further information and interviews please contact
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.