Rental affordability across Sydney has marginally improved in the past year, bumping the NSW capital to the third least affordable city in Australia behind Hobart and Adelaide. However, people on low to median incomes, including Newstart, are still struggling to pay their rent.
The latest release of the Rental Affordability Index (RAI) has found Sydney remains critically unaffordable to significant proportions of the renting population, especially very low and low-income households.
Unaffordability for very low-income households is most severe in Sydney compared to other Australia capital cities, with high median incomes pushing up rents.
The RAI is an indicator of the price of rents relative to household incomes based on new rental agreements. A score of 100 on the RAI indicates that households are spending 30 per cent of their income on rent, which would cause low-income households to be in rental stress. A score of 100-120 shows that households are facing moderately unaffordable rents.
However, lower-income households have to fork out a much higher proportion of their income to afford a roof over their heads:
- Single person on Newstart: 135 per cent of income (extremely unaffordable)
- Single pensioner on benefits: 88 per cent of income (extremely unaffordable)
- Couple pensioner on benefits: 54 per cent of income (severely unaffordable)
- Single part-time worker parent on benefits: 66 per cent of income (severely unaffordable)
- Full-time hospitality worker: 40 per cent of income (severely unaffordable)
For the single person on Newstart, the RAI score is 22 in metropolitan Sydney, meaning individuals are spending 135% of their income on rent, making it the least affordable capital city nationwide.
Affordability for individuals on Newstart has not improved over time, with some capital cities becoming significantly less affordable as Newstart payments are continually outpaced by rising rents and other increases in the cost of living.
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.
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% 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 NSW the second-least affordable country area in Australia
While Sydney’s inner-city harbour suburbs are home to the most unaffordable rental properties, the average household generally must travel at least 15 - 40km from the CBD to areas such as Hornsby, Blacktown, Liverpool and Campsie to find acceptable rents.
Ultimo and Redfern are the only suburbs within a 15km radius of the CBD to offer acceptable rents. However, the RAI score for each indicates they are verging on moderately unaffordable. In the Hunter Region, Newcastle has returned to having acceptable rents, improving from the last RAI score of moderately unaffordable.
The median rental household in Greater Sydney (at June 2019) had a gross income of $103,500 per annum, significantly higher than in country NSW where the median rental household had a gross income of $69,800 per annum.
With a RAI of 122, the average household seeking to rent in regional NSW would face rent levels at 25 per cent of its total income. Rents remain acceptable to affordable across regional NSW. Regional NSW remains the second least affordable non-metropolitan area, after regional Tasmania. Regional Victoria and regional Brisbane are also the second-least affordable country areas in Australia, with tenants spending 25 per cent of their total income on rent.
With a score 119 in the June quarter of 2019, rents remain moderately unaffordable on average in Sydney. The average rental household in Greater Sydney spends about 25 per cent of its total income on rent.
The Rental Affordability Index is released annually by National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence.
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.