Key Takeaways:
- Rental affordability in regional Australia has declined in the last year, while the situation in most capital cities has remained the same.
- Many regional areas are now less affordable than their capital city counterparts, with rents taking up a larger share of typical household incomes.
- The decline in affordability is driven by people moving from capital cities to regional areas, bringing their higher wages and urban purchasing power with them.
- Lower-income renters, such as pensioners and single parents, are struggling to find affordable housing, with many parts of Australia remaining critically or severely unaffordable.
- Advocates are calling for better rental support for regional Australia, including targeting the federal government’s Housing Australia Future Fund to regional areas.
Introduction to the Rental Affordability Crisis
Amanda Mentiplay, a 53-year-old part-time worker, has seen firsthand how rents have risen in regional Australia. She lives in Norlane, a northern suburb of Victoria’s regional city Geelong, in a four-bedroom house with two bathrooms. While the house is ideal for her family, it has some problems, including poor insulation, peeling paint, and broken windows. Despite the need for repair, Ms. Mentiplay loves her "quirky house" and wants to stay. However, her rent has climbed twice in the four years she has lived there, initially costing $350 a week and now reaching $400. She cautions that if the rent continues to rise, she will have no choice but to move somewhere even more regional, to townships more than two hours’ drive away.
The State of Rental Affordability in Australia
The 11th annual Rental Affordability Index by SGS Economics and Planning assesses rental affordability across each Australian jurisdiction except the Northern Territory. The report uses data from rental agreements, comparing it with the incomes of 10 different low-to-moderate-income household types to assess affordability on a scale from "critically unaffordable" to "very affordable". The research shows that many capital cities remain moderately unaffordable for tenants, while Greater Sydney and Perth remain the most out-of-reach. Some regional areas are slightly more affordable than their capital city counterparts, like in Victoria and Western Australia, but overall, there has been a decline in the last year. SGS Economics and Planning principal Ellen Witte said that while the rental market in Australia was "dire" overall, the decline in affordability had slowed, which was in line with interest rate relief.
The Impact on Regional Areas
Regional areas have become less affordable for renters, with many parts of regional Australia experiencing a decline in affordability. In regional NSW, for example, rents now take up a larger share of typical household incomes, partly because average earnings are lower in the regions compared to city areas. The far north coast of NSW is one of the most unaffordable areas in the state, with Clinton Packer struggling to find a two-bedroom rental in the area that is less than $600 per week. Regional hubs such as Orange, Dubbo, and Tamworth have also seen a decline in affordability, with rents increasing by 50% or more in some cases. Catherine Evangelista, who lives on the far south coast of New South Wales, has seen her rent increase by $150 per week since 2018, which is more than 50% of her income.
The Need for a Collaborative Solution
The rental crisis requires a collaborative solution, with advocates calling for better rental support for regional Australia. John Engeler from National Shelter said that there were "green shoots" in the data, which was due to policy interventions from governments at all levels. However, he said that the rental crisis remained "persistent" and that his organization would advocate for the federal government to target regional areas through its Housing Australia Future Fund. Robert Pradolin from Housing All Australians said that rental unaffordability was impacting the country’s productivity and required a collaborative solution. The Grattan Institute’s Joey Moloney said that the solution required a three-pronged approach for governments, which involved building more homes in well-located areas, building more social housing, and increasing the Commonwealth Rent Assistance payment.
The Way Forward
The decline in rental affordability in regional Australia is a complex issue that requires a comprehensive solution. While the situation in capital cities has stabilized, regional areas continue to struggle with high rents and low affordability. Advocates are calling for increased support for regional areas, including targeted funding and policy interventions. The federal government’s Housing Australia Future Fund is one potential solution, but it needs to be targeted effectively to make a real difference. Ultimately, addressing the rental affordability crisis will require a collaborative effort from governments, businesses, and community organizations to ensure that all Australians have access to affordable and secure housing.